Summer lull – delayed

As the summer holiday season is getting into full swing, one would expect capital markets to be calm. The opposite was the case, as particularly European stock markets continued to grapple with the perspective of their central bank threatening to take away the (easy money) punch bowl, just when their regional economy is shyly starting to ‘party’ a little.

Japan taking the foot off the accelerator?

We have had a particular focus on Japan since the beginning of the year, because it looked as though the far eastern G7 country was finally escaping the clutches of nearly 3 decades of deflationary malaise and slow growth. In particular, the tightening labour market – and rising real wages in its wake – gave rise to expectations that domestic consumer demand would reawaken in this nation of savers. Such increased domestic consumption, funded by savings rather than debt, could have made Japan in 2017 one of the strongest growing economies amongst the G7. We have therefore been watching Japan’s economic data releases and central bank announcements with keen interest.

UK fiscal policy – a dilemma on the horizon

The UK election outcome in June seemed to give a clear indication of the public’s view on fiscal austerity, with disgruntled voters wishing for Government spending, not the cuts we have become accustomed too. Labour gained a significant number of seats with promises to spend and support the poorest in society, and even Conservative members of parliament suggested things must change. In the weeks following the election, Conservative ministers Boris Johnson and Jeremy Hunt joined in to support the austerity-weary workers of the public sector, restricted to a 1% ceiling on pay rises.

Tech sector valuations – where to next?

US technology stocks made headlines this week – of a dubious type. Share prices of the biggest tech stocks as represented by the S&P500 Information Tech Index moved above the previous “dotcom” peak.


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