Insights for professional partners

Ructions in the banking sector don’t appear to be the first tremors of a systemic financial crisis, but rather a delayed, jolting reaction to the steepest rate increases in 40 years

Hear from our co-chief investment officer, Edward Smith and head of client development, Ian Dembinski in our quarterly Investment Insights webinar which highlights some of the key themes that are set to shape the investment landscape in 2023.

Our latest Investment Insights looks to demystify some misconceptions about growth and value investing, with important implications given the risks of recession this year. We also highlight the signs we will be looking for to know when it's time to turn more positive.

In these videos Rathbones’ co-chief investment officer Ed Smith gives a review of 2022 and discusses our outlook for 2023.

We can see a path to a new bull market in the second half of 2023, but we’re not there yet.

In the midst of what continues to be a turbulent year for investors, our lead article explores the varied challenges facing some of the world’s major economies, and the likelihood of different inflation and recession scenarios coming to fruition.

Our latest Insights highlights why we still see US or global recession as unlikely over the next 12 months, despite what you might be reading in the headlines of the financial press. In any case, no two downturns are the same (each is unhappy in its own way), and a crucial point that often goes missing in the current debate is that it’s still too early to be clear about what kind this one will be, and therefore how to properly defend portfolios against it.

In the midst an unfolding humanitarian crisis, our thoughts are first and foremost with the people of Ukraine. But we also have a duty to our clients to monitor the investment impact of the war, and we set out some of the investment implications of these challenging times in our latest Investment Insights publication.

The events happening in Ukraine first and foremost provoke our deepest sympathies for the human suffering that is being brought about. We also have a duty to our clients to monitor the economic and market impact and keep you informed about the investment implications. What seems clear to us is that the conflict has increased both the upside risks to inflation and the downside risks to global growth.

Most geopolitical crises of recent years have hit local markets hard, but at worst done only fleeting damage to global indices. However, there are three events that buck this trend: the 1973 Yom Kippur War/OPEC oil embargo; the 1979 Iranian Revolution; and the 1990 Iraqi invasion of Kuwait. All centre on the price of energy.

A similar oil and gas shock in Eastern Europe as a result of fighting in Ukraine would exacerbate the already sizeable risk that high inflation becomes endemic, which would then require tighter monetary policy to get it under control.

It’s been a difficult start to the new year for investors, with the global equity benchmark falling into so-called ‘correction’ territory. We can't say for sure when the pain will end, but for the reasons set out in this update, we are confident the correction will be short-lived.

Global equity and bond markets had a bumpy end to 2021 as investors began to fear the worst of both worlds — stagnating output and persistently rising inflation, that nasty combination called stagflation. While we do think inflation will begin to fall back from the spring, there is considerable uncertainty around its outlook. However, fears of stagnating growth look overdone.

Our lead article looks at the buzzword of the moment — stagflation. As investors’ fears of the potential stagnation of output coupled with rising inflation ebbed and flowed, equity and bond markets experienced some volatiliy. What will this uncertainty mean for the year ahead?

Our lead article explains that as China’s recovery slows, policymakers there look unlikely to stimulate growth by loosening either the monetary or fiscal purse strings.

For many years the fortunes of the FTSE mining sector have been linked to developments in China. Rapid growth in demand for commodities like iron ore and copper in the late 2000s led to what became known as the first mining supercycle. That was followed by a downturn from 2011—15 as slowing demand from China combined with overexpansion of mining production.

In our first article, we explore how benchmark US government bond yields spiked as investors braced themselves for the release of pent-up consumer demand, encouraged by Joe Biden’s $1.9 trillion stimulus package. We take a look at where US bond yields and interest rates may go from here, and what that means for equity investors.