19 November 2015: Shifting the balance
- Norway’s sovereign wealth fund is swapping government bonds for more real estate. We share this concern over sovereign bonds but also see drawbacks to property, which looks bubbly in several major cities.
- Global monetary policy is nearing an inflection point, with higher rates coming in the US and more easing likely in the Eurozone and Japan. But the rate environment remains supportive for growth, and risk assets.
- Improving sentiment over China has led to a rebound in equity markets. The most encouraging news has come from accelerating consumer spending growth, which is helping to offset an industrial and investment slowdown.
- We are overweight in the Norwegian krone against the euro. Additional ECB easing will keep the euro under pressure, while the krone will benefit from a stabilizing economy and wider rate differentials.