March 2024
- Inflation and interest rates continue to dominate financial markets and the US economy continues to impress but there is much more talk now of interest rates rising which is just what Jay Powell wants I suspect.
- A significant recession in any of the largest economies continues to be absent but the threat still looms large especially in Europe and the UK the longer higher interest rates are in place the more likely a recession becomes.
- The market waited patiently for Nvidia results and were rewarded with revenues that exceeded forecasts and were way beyond the rosiest estimates of Wall Street analyst estimates as reported in the FT this weekend.
- China is doing its best to stimulate its economy which bodes for well for Europe too.
- The hard to follow fixed interest market is offering good opportunities for investors and this year has the potential to make up for some of the lost ground over the last two years.
- Purchasing Managers indexes are down globally, and some say this is the most accurate way of forecasting a recession.
- What are we getting right:
- Staying away from direct investments in China.
- Selling low and buying low.
- Getting into Japan early at least a year ago the rest are only just catching up.
- Invested in Tech and staying with the US in general.
- Not selling off our Fixed Interest exposure and watching their value return
- Watching out for cash accounts and short dated bonds ceasing to offer attractive levels of return and what to do when this happens.
- What did we get wrong:
- Investments in Infrastructure and we took too long to move away from agriculture.
- Our portfolios are holding up well because:
- Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds.
- We continue to look out for structured products to place in our portfolios because by doing so introduces a certainty ingredient. However, they are not offering the risk free returns they were.
- Our portfolios use fixed interest and fixed interest investments suffer when interest rates are high and there is more supply – this affects their value negatively. It should be remembered however with fixed interest you get your money back at maturity not the case with other investments so it’s a matter of holding these investments until interest rates start to come down or the investment matures.
Please note that:
- This information in isolation is not financial advice.
- Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
- It is advisable to regularly review your investments.
