No doubt global growth will take a short term hit, but it is not... by Sean Darby

No doubt global growth will take a short term hit, but it is not going to result in a credit crisis.

Sean Darby

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Categorized in : Company News

The danger is that with a mountain of cash parked in money market funds any trade ceasefire would cause a huge shift away from safe assets, presently, investors don't seem to be in any particular rush to buy equities – earnings revisions have yet to bottom out while economic surprises have been rare.

Since the beginning of the year investors have faced a series of macro changes to the investment landscape.

We have had a pretty good rally in risk assets since the beginning of October ... Clients have only really got two or three more weeks to do anything before year-end and they are not going to take big positions going into December, on Japan, people also may have read too much into the possible crossover from the ECB.

The dislocation from a strong dollar, rising long rates and falling oil prices is still being factored into share prices in our view.

Contrary to the hype and hysteria that has accompanied the fall in China share prices, there is unlikely to be any impact on bank solvency or underlying credit conditions.

The markets have never really priced a country leaving the euro system, investors were positioned for 'an extend and pretend' scenario, not for capital controls or a Grexit.

Markets in Europe have perhaps woken up to a less favourable environment in terms of the negotiation for Greece and bond yields.