Black Swans 2020
With fear of recession in the air, ongoing uncertainty surrounding the upcoming US election cycle, and heightened tensions in the Middle East, the year ahead is fraught with danger.
By Eleanor Mahmoud, Wealth Manager.
Ammalan Annalingam, Co-Head of Multi-Asset Investments comments...
'By definition a black swan is an unpredictable event, so I would like to focus on two risks: dollar funding and US inflation. In September last year no one was really sure what confluence of factors caused the scramble for dollar liquidity, and this year we could see a similar event. The Fed can pump in liquidity, but its not necessarily the case this will be passed on. A major funding squeeze at the beginning of 2020 could trigger major market panic.
Inflation has now been widely written off, but when one considers how close personal consumption is to the Fed's target and where its been as recently as August, its not difficult to see how continued reduction in unemployment, wage increases and solid growth could see inflation increase. Accompanied by the Fed having to raise rates, this could result in a 2018 Q4 scenario.'
Read the full article here.
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