In this forecast we look forward to 2018, with a perhaps somewhat brighter outlook for the domestic UK economy than the market consensus. Much of the commentary surrounding the UK is very negative, but looking at the data itself brings to mind the line from Russell Howard’s TV show: “It’s not all doom and gloom!”
With less dovish tones starting to emanate from central banks globally, relatively high valuations across equities and a cooling off in the London property market, it is safe to say that we are not spoilt for choice in terms of attractive opportunities. Following a somewhat volatile second quarter, how are we positioned for Q3?
Retail sales growth has cooled over the last month, with the year-on-year (YoY) increase falling from 4.1% to 2.6% in March. With prospects for higher inflation coming through in 2017, much newsflow is centred around the prospect for weaker overall spending this year and the impact this will have on various industries and business segments. How do we maintain exposure to the domestic economy, whilst still protecting the portfolio from downside risk?