The end of quantitative easing in the Eurozone may be getting nearer, but the European Central Bank still has other monetary-policy instruments at its disposal to limit any interest-rate rise.
Lower taxes and deregulation could provide a modest boost to the U.S. economy. Political uncertainty ahead of key elections may harm growth in the Eurozone.
In early 2016, fossil fuels and industrial metals started their road to recovery and we remain modestly positive on oil, gold and silver. The outlook is mixed for industrial metals.
Over the next twelve months, we expect only a mild net increase in interest rates, but plenty of volatility along the way. The interest-rate differential between the United States and the Eurozone may reach its peak in 2017.
We expect the upward trend in the U.S. dollar to continue for now, as investors seem to remain enthralled with the new U.S. administration. We expect the British pound to remain weak, however.
We see a volatile sideways market. Our focus remains on dividend-yielding stocks, as well as interesting sectors such as technology, healthcare and energy, plus on any tactical opportunities along the way.
Investing in a liquid portfolio of large, high-quality, investment-grade infrastructure bonds can potentially lead to interesting risk-adjusted returns.
We live in uncertain times. Portfolios are in need of protection from the hidden risks that can build up when seeking alpha.
Given the low-interest-rate environment in many developed markets and political uncertainties, it should remain critical to diversify across both asset classes and regions.