INVESTMENT STRATEGY – PRIVATE BANKING, 3RD QUARTER 2014
At a glance
- Globalization is under pressure. The new mantra could be regionalization, with a more multi-polar currency system and some degree of cycle de-synchronization.
- Resilient but maturing cyclical dynamics in the US are leading the Fed to pursue its monetary tightening.
- The European and Japanese economies remain vulnerable, upheld for now by committed monetary and/or fiscal authorities.
- In the emerging bloc, some countries are approaching non-inflationary growth with sound public finances and looser monetary policy. But fundamental disparities warrant a high degree of selectivity.
- On the asset allocation front, durably low interest rates should continue to lead to structurally elevated asset valuations.
- Western high yield corporate bond spreads no longer compensate for historical default levels. Diversify developed credit exposure into emerging debt.