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Having ended 2017 as one of the worst performing global sectors, sustained outperformance lies ahead for energy stocks in 2018. The underlying crude oil market is now undersupplied while inventory levels have fallen sharply. These supply-demand and inventory dynamics have historically translated into improving corporate profitability over the coming 12-24 months.

UBP continues on its way to enhanced ESG investment standards

A new asset class for responsible investors

A market context favourable to convertible bonds

The sudden spike in US long-term interest rates set off a more volatile environment for global equity markets. This, combined with a strengthening yen, resulted in a continuing bearish tone in the Japanese market.

Ende vergangener Woche erlitt der Goldpreis einen Rückgang, als die geopolitischen Spannungen in Bezug auf den globalen Handel abzuflauen schienen. Anlass dafür war Präsident Trumps Ankündigung, dass Verbündete wie Kanada und Mexiko von den umstrittenen Strafzöllen auf Stahl- und Aluminiumeinfuhren ausgenommen seien.

Though markets breathed a sigh of relief following the announcement of US tariffs, investors should regard them as a transition to the next stage of the Trump presidency using the UBP ‘Start-Stop’ Framework. Continued US dollar weakness and a more sustained rise in volatility should characterise the next phase of the Trump administration. Capital protected and hedge fund strategies should help cushion portfolios looking ahead.

The high volatility of recent weeks likely represents a regime shift from the low volatility environment of 2017. For bond-focused investors, it means continued diversification away from not only interest rate risk but increasingly, seeking alternative drivers to ongoing narrowing of spreads. For equity investors, high volatility brings opportunities in conservatively structured products while capitalising upon the still strong earnings growth around the world.

Since the beginning of the year, investors’ concerns over a return of inflation have come back to the fore and triggered a sharp sell-off in US Treasury bonds. Investors were initially unfazed, as this move reflected solid US growth prospects.

From the Desk of a Fund Manager (February 2018): New Federal Reserve Chairman Jerome Powell’s first day on the job saw him take up the post following an unexpected pick-up in US wage data in January.

WTI oil prices are flat year-to-date after having seen the best start to a year in over a decade and reaching a 3-year high of USD 66.5 in mid-January.

The next stage in the post-2008 transition.

From the Desk of a Fund Manager (January): The global equity rally in 2017 stemmed not only from subdued geopolitical risks, but also in part from growing evidence of a pickup in world economic trade and a recovery in commodity prices.

Both chambers of the US Congress are targeting a tax cut which could reach USD 1.5tn over the next decade. Much has been made of the recent US tax reform.