Infographic - Insight into the minds of professional investors
The below infographic which is split out into 5 different sections has been produced so give consumers insight into the minds of professional investors. Throughout the 5 piece infographic the following headings will be covered;
- Confidence in the UK economy among fund managers
- How investors believe the UK economy would be affected by Scottish independence
- If fund managers think Carney will be better than King as Governor of the Bank of England
- Investors view on what impact the end of US QE will have on global markets
- Their view on the price increase of gold and oil
The view from Capital Spreads is that even though we have seen better data and improving sentiment coming out of the UK, it may be wise not to celebrate just yet. There is a real danger of the formation of an asset bubble, particularly a housing bubble, occurring due to exceptionally low rates aided by government schemes. Tightening restrictions on bank lending, through demands for increased balance sheets and more stringent regulations, could tighten lending, leading to a credit crunch, last seen in 2007/2008 which ultimately resulted in bank failures. It is also worth noting the general election due in May 2015. A steady recovery could be hampered by radical political change in the UK.
Mark Carney is clearly the George Clooney of central bankers and is going down a storm with city investors, mostly for his suave way with the press but critically his forward guidance principle, that has calmed markets and given investors visibility in the short to mid-term.
Far from fearing a divorce from Scotland, fund managers appear eager to wave them off, anticipating if anything a boost for the remaining Union. The UK is still heavily reliant on its financial and professional services industries, overwhelming headquarters in the South of England. The advent of fracking technology and discovery of shale reserves in England may reduce the reliance on the North Sea oil supply, the plume on Scotland's economic thistle.
Oil will be largely dependent on geopolitical uncertainty in the Middle east over the coming years making prediction more difficult. Should we see increasing tensions and fractions between the Middle East and the West we could see oil climb higher. Unexpected military actions, for example a terror attack, would shock the market and cause prices to spike.
Professional investors seem confident that interest rayes in the USA will remain low for the foreseeable future which should have a positive impact on consumer sentiment and allay fears around the housing market. The short term impact, then, on the global economy - of which America is such a fundamental part - should be positive. Real fears prevail, however, over the market aftershocks following the commencement of tapering. It is clear that, hwowver gently the Fed is able to implement the winding down of QE, the investors are fearful and, with the expecation of downward market, movement, are positioned foir a sell-off. Inshort, we may be in for a very bumpy 12 months for gloabl equities - and particulary US equities.
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This article is the combine work of both Hannah Slowther (broker) and Nick Lewis (Head of trading and market risk) employees of Capital Spreads.