UBS House View «January 2019»
The latest survey by the American Automobile Association showed that 73% of Americans don’t trust self-driving cars. This might help explain the December car crash in financial markets, after Federal Reserve Chair Jay Powell claimed that the central bank’s balance sheet reduction program was on “autopilot.” Not only did markets have the worst response to a Fed meeting since 1994, but the December sell-off also contributed to making 2018 the worst year in a generation in terms of the breadth of the decline in financial assets. Looking across 19 major asset classes, only two (US and euro government bonds) delivered positive performance in local currency terms.
After the market failed to deliver any presents for Christmas, several policymakers seem to have gotten the message that they had been naughty. So they made New Year’s resolutions to be nice. The Fed has now clarified that its hands are on the wheel, and that it might hit the brakes on rate hikes. Rhetoric on US-China trade has become more positive, and China has taken steps to stimulate its economy. The impact of this charm offensive has been enough to help markets shrug off the fact that two of the world’s leading democracies – the US and the UK – are effectively, or literally, shut down.
UBS House View Investors Guide
Our publication "UBS House View" gives you a compact overview of UBS's opinions on the financial markets. Drawing on our global investment and research capabilities, it aims to offer you the best, most up-to-date investment guidance.