Country Outlook (March 31st 2014)
- Equities – Low single digit annual gains, constrained by reduction of fiscal and monetary stimulus and high valuations.
- Govt Bonds – Mild fall in bond prices increasingly compensated with yield.
- Equities – Not quite as good as the USA.
- Govt Bonds – With higher inflation and government budget imbalance than US continued poor performance.
- Currency – Stable on decreasing inflation expectations.
- Equities – Short term out-performance from depressed levels will give way to long term structural issues.
- Govt Bonds - Fiscal discipline, supporting monetary policy and lack of inflation maintain Italian and German preference.
- Currency - Improving growth prospects and subdued inflation prospects maintains over-valuation.
- Equities – Stagflation fears.
- Govt Bonds – Declared inflation target scares marginal government bond traders.
- Currency – Loose money, low growth and debt downgrades maintain pressure.
- Rest of the World
- Equities – Africa, Mid-East and smaller Asian and Latin American countries provide selective best opportunities.
- Commodities - Perceived US monetary tightening weigh till move into mid cycle.
- Chinese military developments.
- Regulation of financial institutions and products.
- Religious extremism.