The first estimate of Q1 US GDP growth came in at 2.3% on Friday afternoon, slightly ahead of consensus expectations but much lower than the 2.9% seen in the previous quarter. Some may see this as a disappointment and a further sign that the global economic recovery is slowing. However, we believe Q1 GDP numbers have structural flaws, which means that the US Federal Reserve (Fed) is unlikely to reverse their plans for the trajectory of interest rates.
The impact that Brexit will have on asset prices remains unknown. At present, it appears that neither the credit nor the equity market are concerned, with regard to financials. Global economic growth remains robust and we forecast a relatively benign operating environment for companies in the UK and the Eurozone. But where are we finding attractive opportunities within the financials space?