26 April 2019
Chart of the week: Risk-taking is back on...
…but be wary of lower-quality bonds
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1 min
12 April 2019
Chart of the week: Globalisation buffers portfolios
A quick look at the geographic exposure of the UK stock market reveals that the vast majority of UK stock market earnings are sourced from overseas. This is great news, as it means that our stock market is exposed to faster-growing economies which should boost revenue growth for UK equities. The benefits of globalisation should buffer any heavily UK-exposed portfolios. Read more about the future of our economy in our latest Investment Insights.
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1 min
5 April 2019
Chart of the week: Europe needs healthier banks
<p>Large loan-loss provisions hamper Europe’s banks. These provisions cover things like bad loans and customer defaults and cost the sector a lot. The problem is particularly acute in Portugal and Italy but still prevalent in all the major European economies. The region needs recovery in its banking sector before the long-awaited upswing in its indices can begin. Until Europe’s banks free themselves from bad debt, the region will remain stuck in economic mud. </p>
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1 min
29 March 2019
Chart of the week: All eyes on the yield curve…
<p>As the joke goes, an inverted yield curve has predicted 11 of the past nine recessions. Its traditionally one of the most reliable harbingers of economic recession but a closer look at timings show that its use is limited. Over the past 50 years, the number of months from inversion (defined here as 1-year US Treasury yields surpassing 10-year yields) to recession has ranged from seven up to 24, averaging 14. So, an inverted yield curve has proved to be a reliable indication of recession, but <em>not</em> its timing.</p>
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1 min
22 March 2019
Chart of the week: Feeling short changed?
Unfortunately for us, this decimation in the standard of living is unique to the UK. Not only have real wages struggled since 2008, we now have the poorest rate of social mobility of any advanced major economy. Our future is uncertain, and that can’t just be blamed on Brexit. Edward Smith, Rathbones’ head of asset allocation research, discussed his concerns about our small but troubled economy and considered our future at our annual investment conference.
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1 min
15 March 2019
Chart of the week: “Just get it online”
<p>In some ways, retail is going through a similar transformation to that of the auto industry, when greater automation and systems seeped into manufacturing decades ago. Nowadays, retail shopping is less about swamping high streets with clothes or sofas in every size and colour. Far better to save your property budget for creating a huge and efficient logistics network to deliver what consumers want, to their door, overnight. In this just-in-time environment, quality data is pivotal. But, very few companies have it, and they tend to reside in Silicon Valley.</p>
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1 min
8 March 2019
Chart of the week: Will Brexit have a global impact?
<p>Britain is a small, open economy. ‘Small’ may sound a bit strange when by GDP, the UK is the fifth-largest country in the world. But, in fact, we only contribute 2% of global GDP, which means that we aren’t big enough to unilaterally influence global prices, interest rates, or the global economy at all. We are a small economy and we have some big problems, but a Brexit wobble won’t derail the whole global economy.</p>
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1 min
1 March 2019
Chart of the week: A lag in our R&D spending
<p>Productivity growth is falling around the world, but the slowdown is more acute in the UK. This deceleration could be lessened – and even reversed – by investment in research and development (R&D), which kick-starts new technologies and, ultimately, increases growth and productivity. However, the UK’s spending in this area is falling behind other developed economies at a time when we need to be leading the way.</p>
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1 min
22 February 2019
Chart of the week: Brexit crimps investment
<p>Foreign companies and governments are simply not investing in British assets as they used to. This is worrying because modern economic growth relies on technological transfer, or learning from others and improving on it. The benefits of this transfer are clear from the productivity data - firms with inward investment from overseas are almost twice as productive as firms without any link to foreign investment. So, a slowdown in this area means a slowdown in productivity; a big worry.</p>
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1 min
8 February 2019
Chart of the week: Ask Dr Copper
<p>Copper is all around us: in our houses, our cars, our hairdryers and it’s even one of the most intensively used raw materials in the green energy revolution. Its wide use in everyday products should make copper prices a good indicator of economic health. But there are other factors at play, and we found that the price of copper seems to respond to economic growth with a six-month delay. Perhaps we shouldn’t rely too heavily on Dr Copper’s reputation for giving us an early diagnosis.</p>
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1 min
