We believe it is vital to consider both cyclical and structural forces in building our central economic thesis
Despite what has been an incredibly tumultuous, unpredictable and at times unimaginable period for global politics and an initially spluttering return to global growth, central banks appear to have successfully steered markets through the worst, ironing out the kinks and at times acting together to present a semblance of global harmony. Sometimes, markets have appeared to simply ignore events that in less interesting times would have caused a rout. Somehow though, it still doesn’t feel that the aftermath of the financial crisis is fully behind us, nearly 10 years on, and we believe it is vital to consider both cyclical and structural forces in building our economic and market outlook.
Cyclical factors can often dominate investor thinking, but typically exert a short-term influence on the markets. We take a two- to three-year view of the world when building our central economic thesis, which guides and anchors — but does not strictly dictate — our investment decisions. For this reason, we also need to incorporate, or at least acknowledge, some of the structural influences that can very quickly become a core focus for investors.
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