In a bid to help provide a sound footing from which to navigate the vagaries of 2015’s investment landscape, Portfolio Adviser asked a number of investment commentators which graphs they will be keeping an eye one over the coming months, to provide a broad base for their investment theses.
Two in particular stick out.
The first is from JP Morgan, which told Portfolio Adviser that continued divergence in economic performance and monetary policy will be the single most important theme investors will have to grapple with this year.
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The firm said: “Both the US Federal Reserve and the Bank of England will likely raise rates in 2015 as their recoveries mature, whilst feeble growth and the risk of deflation will continue to threaten Japan and Europe. There are both risks and advantages to this divergence but, for investors, it will have three implications: a stronger US dollar, continued weakness in global commodity prices and looser monetary conditions globally than previously expected.
The second is from Max King, portfolio manager on Investec Asset Management’s Multi-Asset Team, who said the graph he is going to be keeping an eye on illustrates the nature of the current business cycle.
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“Restraint of credit growth,” he said: “means a prolonged business cycle rather than the credit-driven boom & bust cycles we have seen recently. More muted cycles less dependent on credit expansion and so less dependent on government spending to clear up the subsequent mess should mean steadier, more stable growth.
“It is the parable of the tortoise and the hare – the tortoise wins the race. Moreover, the quality of growth should be better as the ensuing economic environment is more conducive to long term investment," he added.
