Author: james Carter
There has been a clear trend evolving over recent months which is whenever Janet Yellen (Chairwoman of the US Fed) speaks, she is clearly hawkish and it leads to support for the $US and weakness in the “yield play” sector of stocks. Investors should not forget that interest rates are at artificially low levels, after years of financial engineering by central banks to avoid a deep global recession / depression after the GFC. As interest rates rise, it simply offers an alternative to stocks for investors seeking some yield for income which has not been available for many years.
After yesterday’s switching within our portfolio, plus recent profit taking into the December / early January buying frenzy, we find ourselves sitting on over 30% in cash, hunting for opportunities . One thing we have learned at MM over the years is opportunities always come along and sitting on cash for a few weeks / months, rarely is too detrimental to overall investment returns and it can be good for our sleep!
In a 45 minute speech last night Theresa May outlined her plans / hopes for BREXIT which was tough enough to send European equities lower, led by the UK FTSE which fell 1.5%. There is a long and potentially torturous journey ahead in the negotiations between Britain and the EU, hence a correction is hardly surprising after the 10% gains since early December by the UK’s FTSE.
Really bullish, there's more to go in the reflation rally
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