In today’s briefing:
- China Is Adding to World Liquidity, But At A Cost…
- Portfolio Watch: Manufacturing versus Services
- UK Watch – Are UK assets a go or a nogo?
China Is Adding to World Liquidity, But At A Cost…
- China’s economy is not anything like as ‘bad’ as being reported by the popular media. Yet, there are deep structural challenges which will hinder future economic growth
- Monetary policy makers have recently been constrained by the weak Yuan (CNY)
- Liquidity is now being re-injected aggressively. More liquidity boosts economic activity. The cost could be a CNY of RMB8/ US$
Portfolio Watch: Manufacturing versus Services
- Welcome to our weekly Portfolio Update.
- We have had a great week as Energy continues to outperform more labor-intensive sectors, while the USD shrugged off a weak job openings report to rebound into month-end.
- The overarching theme from an allocation standpoint is the divergence between Services and Manufacturing.
UK Watch – Are UK assets a go or a nogo?
- Conclusions upfront: Stagnation is almost a certainty, while stagflation might only be a reality when looking at core CPI.
- GBP looks like a short from here as the BoE is moving closer to a pivot than more hikes. UK Gilts is starting to look interesting as well.
- A fair risk/reward in UK equities, but we’re still on the sideline
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