Our cyclical baseline forecast through 2017 is for a continuous expansion, mostly supportive monetary and fiscal policies and broadly range-bound markets. However we are concerned about risks lurking beneath the surface, especially in the context of asset prices that in many cases appear stretched.
The recent bout of market volatility that followed sedated summer trading may be a guide to what lies ahead: occasional remine switches between periods of relative calm, (supported by benign macroeconomic data and sedative monetary policy) and periods of rising volatility and uncertainty caused by… “whatever”. This is why we favour a more cautious portfolio positioning despite our relatively benign baseline macro outlook, in line with our “Stable But Not Secure” secular theme…
