July 14, 2017

DNCA's weekly market outlook by Igor de Maack

Management comment

Janet Yellen gave the markets a real boost by announcing that the US economy is in strong health and will be able to support future rate hikes. Her speech therefore restored bullish sentiment among equity markets after several weeks of hesitation. Of course the forthcoming reporting season still needs to confirm the trend.

In China, the communist regime has proven incapable of curbing the real-estate bubble. It would even appear that as the authorities impose increasingly strict controls to stem the property boom, buyers pile more readily into real-estate assets before they are restricted from doing so. This property frenzy is having a significant impact on the Chinese economy and incurring risks. Ten years ago, real-estate and more generally all of the sectors associated with the residential construction industry represented 10% of GDP. The sector now represents over one-third of the total.

France celebrates the storming of the Bastille on 14 July 1789 and also Federation day on 14 July 1790. This national celebration symbolises the change from the old regime (monarchy) to the new regime (a democratic nation), an allegory representing the shift in the current global economy in terms of monetary policy, i.e. away from the old accommodating regime towards a new more restrictive regime.

Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in July 14th, 2017.

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Janet Yellen gave the markets a real boost by announcing that the US economy is in strong health and will be able to support future rate hikes. Her speech therefore restored bullish sentiment among equity markets after several weeks of hesitation. Of course the forthcoming reporting season still needs to confirm the trend. In China, the...
2017-07-14