It is tempting always to use the last edition of the year of Prospects to reflect on all that has taken place in the markets. Such has been the huge shift in the political landscape this year, both here and across the pond, it hardly seems relevant to review the year, without a clear view from most commentators.
I believe this political upheaval is a direct effect of monetary policy, specifically Quantitative Easing, which has led, inadvertently, to the wealthier getting wealthier with little effect on others; and rather than vote to the Left, voters are complaining more about the Establishment. With further votes in Europe over the next 18 months, we must be realistic that these may also surprise. That said, stock markets have been extremely resilient in the face of this new political landscape and it will be interesting to see if this remains the case throughout 2017 – although, we must remember that current politics are not the only threat to stability, as Anthony Hilton, one of our guest contributors, explains in his exploration of the threats to the City’s current status as the number one global financial centre in his editorial.
It is also interesting to see how bond markets react to Mr Trump winning the Presidency. It is my belief that inflation could start to take off, resulting in rising interest rates, which is discussed by Brian Tora who comments on the end of the 30-year bull market for bonds in his economic focus.
The oil price increase since January is bound to have an effect on raw material prices and therefore also affect inflation in due course; a further rise in the price of oil will bring it nearer to the long term average which should help drive inflation back to normal levels of around 2%. This would be healthy both economically and politically and I think we would all feel slightly more comfortable with slight wage increases and expectations of paying a little bit more each year for basic goods, as opposed to runaway inflation, or deflation.
In addition to our regular features, this edition of Prospects sees us formally launch our new Wealth Planning service for existing clients. When we carried out a client survey last year, the huge number of clients who responded told us of a need for at least one area of wealth planning, with pension advice being the highest priority. For this edition, our team of experts suggest a number of ways to ensure your financial affairs are in good order as we enter the last quarter of this tax year.
The changing political spectrum is certainly posing some challenges to the established way of thinking and we are acutely aware of the need to take into account this new landscape and we will continue to keep a close eye on events and remain active in looking for investment opportunities, as and when they arise.