Last quote by Richard Turnhill
Richard Turnhill quotes
Compared to [other] periods in history, and certainly in the last six years, the future looks much tougher.
You have to think about what a correction in rates means for some of these assets.
But some of these trades are now looking very crowded, and valuations on some of these assets are high.
Investors should be encouraged that prices are stabilizing.
Large amounts of money are sitting in instruments that offer zero or increasingly negative returns. And that environment creates an enormous search for yield.
One scenario that could upset the market is if those reflationary pressures build and we get a more material shift in monetary and fiscal policy.
We see room for further inflows.
Put that together with yields still in mid- to high-single digits across EMD [emerging-market debt], we think there's potential for emerging-market debt to go further.
Having exposure to emerging markets is now part of having a balanced portfolio.
We think they'll cut to zero, and that will be followed quickly by quantitative easing where they have significant scope. In the euro zone, we think a move to further negative rates is possible, and more importantly, extending the quantitative easing program is highly likely.
I think the bigger issue to us is actually that central banks are pushing the limits of what they can do, and monetary policy was never designed to solve structural issues. We've just had the first major shock coming at a time when there's little scope certainly in terms of traditional monetary policy, and we know that monetary policy has been nominally effective in boosting GDP growth.
You're facing a number of elections, not least of which is in the United States, which means any significant shift in fiscal policy or structural policy is relatively unlikely. In an environment where monetary policy has less scope to respond, I think we're going to have to be patient to see fiscal or structural policy.
This is going to be a big event. Up until a few weeks ago, the markets were pricing in a probability of the U.K. leaving the EU at around 20 percent. Now the chance is roughly 42 percent. We are going to see significant volatility ahead of the U.K. referendum.