May 12, 2017

DNCA's weekly market outlook by Igor de Maack

Management comment

A gentle wind of optimism is blowing across the markets, like a breeze gently swaying the heads of wheat in the fields. Heartened by the favourable outcome of the French presidential elections, investors are piling into equities. The heaviest inflow into equities in eighty weeks was recorded (USD 8.8bn) which also saw the most significant weight of net investments into European equities (USD 6.1bn) marking the seventh positive week in a row in the asset class. Systemic European risk continues to abate in the minds of investors. The election of Emmanuel Macron surprised a number of observers and now his reform projects have to be approved by the French parliament and, above all, prove applicable. Although “Macronomics” is highly appealing on paper, both nationally and on the European scale, its practical application may prove considerably more challenging. Donald Trump is currently finding this out to his cost, amid renewed suppositions and rumours of a possible impeachment following potential collusion by his team with Russia. The spectre of another Watergate-type scandal is now looming over Washington. This situation has arisen at the worst possible time, as the US economy has entered the second phase of its cycle over two years and could reach the end of its hyper-cycle within the next two years.

The latest study released by the Fed regarding credit market data, highlights a slowdown in loans granted across all categories since the beginning of 2015, although the figure still remains above the historic average compared to GDP.

In China, the lack of clarity regarding the level of debt continues pose a threat in the world’s second-largest economy. Ultimately, things are not quite so bad in the eurozone after all.

Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in May 12th, 2017.

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A gentle wind of optimism is blowing across the markets, like a breeze gently swaying the heads of wheat in the fields. Heartened by the favourable outcome of the French presidential elections, investors are piling into equities. The heaviest inflow into equities in eighty weeks was recorded (USD 8.8bn) which also saw the most significant weight...
2017-05-12