Investment Newsletter - March 2015

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Investment Newsletter March 2015

Historic Highs Hit the Headlines! Neal Foundly Investment Analyst

“FTSE Nears 7,000!”, “Nasdaq Breaks 5,000!”, ”German Yields Hit All-time Low!”, “Nikkei Jumps To 15-year High!” It’s been a bonanza for financial headline writers in recent weeks as many financial markets have broken new ground. Equity markets have forged ahead and bond markets have continued to rise, pushing yields to historic low levels and even to negative yields, guaranteeing buyers a loss if held to maturity. So, what’s going on? Well, it’s not that the news has been all good, but – and this is crucial in asset markets, which discount future expectations - there have been no additional risks to cause investors to take fright.

deflation; the destabilising plunge in oil prices; the economic slowdown in China; a possible hike in interest rates in the UK and US; the geo-political issues in the Ukraine and Syria and the human cost of the Ebola epidemic. What matters for markets is that at the margin, these risks are not getting worse and this has given the investors the green light to continue buying. This is reflected in plunging risk indicators. One popular risk metric is the VIX Index that reflects the volatility in the S&P 500 Index in the US. The VIX has fallen 23% so far this year and currently trades at around 14, fairly close to the low point of its one-year range of 10 to 30.

Look at the issues that have headlined in newspapers and our blogs over the last six months: the implications of a possible Greek exit from the Eurozone; proliferating Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Conduct Authority. Equilibrium Asset Management is entered on the Financial Services Register under reference 452261. The FCA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission.


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