Tuesday, March 12, 2013

Take risks to market stability last

Sat relatively quiet week for economic and corporate news flow, it would be a "Greek tragedy" is still conducted ordered the most market attention.

Last week saw stakeholder Greece has tried to sound more relaxed about the potential consequences of a disorderly default. This situation is studied inattention accompanied by EU negotiators take a hard line in Athens regarding the implementation of further austerity program.

Truth is, no one knows for sure the wider implications of Greece is defaulting on the loan. Increased confidence displayed by some in the middle of negotiations at this time no doubt helped by the recent activities of the ECB, and bail-out fund is still sitting on the sidelines, but the fact remains untested.

It is, of course, not only the uncertainty on the horizon. The rise in oil prices this week testify to more aggressive rhetoric of Tehran. However, the context suggests moving back to the negotiating table, Tehran threat to be seen as an attempt to strengthen their position.

Upcoming Elections France, together, have the potential to harm investors, especially if French voters choose how they recently surveyed.

All of them, apart from the fact that the equity market is now almost back to the level where they fell dramatically last summer, and you can understand why some markets beginning to wonder if the rally risky assets to finish. Short term, we believe there is potential for a pull-back rally given the size of today and the near future some uncertainty out there. However, there are several reasons why we believe investors will benefit from having a slightly larger allocation than the average for risk assets in a balanced portfolio.

U.S. recovery now seem to be more stable footing, the job market is gaining momentum, manufacturing and non-manufacturing order books look healthier, and may have even tentative signs of life in the housing market long dead.

In Europe, the data is currently pointing to a stabilizing economy than sliding lower. We have a fantastic new government in place in some of the most misunderstood countries: Spain and Italy are two important examples.

Central banks around the world continue to do their bit to maintain financial stability. Real interest rates in developed countries will remain at record lows, while the emerging market central banks started to relax policy. The ECB is very useful in lending operations, we see more later this month, while the U.S. authorities monetary equally active for some time now. With the valuations of asset classes still focused on tangible results desolate than we think is likely, some risk exposure should be respected, although the level of calmness that may be required.

No comments:

Post a Comment