Our Investment Update

Last Monday, we commented that, “Global equity markets moved higher again last week with the S&P 500 Index reaching its forty second all time high for the year to date.   At the same time, implied volatility (measured on the VIX) remains near record lows.  It still leaves us feeling a little nervous – especially as the last significant market correction was so long ago.”  Here we are, a week on, and that sums things up equally well today.

We also noted last week that, “Economically, the world still seems to be in good shape and it is this background that is giving investors confidence.”  This message, too, has been reinforced by comments from the International Monetary Fund (‘IMF’).  The Fund’s Chief Economist, Maurice Obstfeld, said last week that the current acceleration in global growth is broader based than at any time over the past 10 years.  The IMF increased its forecasts for economic growth for 2017 and 2018 to 3.6% and 3.7% respectively.   With inflation remaining largely under control, there is every reason why investors should be confident.  Confident but not complacent.

We are still concerned that such low levels of volatility may have led to complacency and to positioning in risk assets that might not otherwise have been taken. This has the potential to unwind fast if a ‘risk off’ mood prevails.  If it does, a short, sharp shock might result.  So prudence remains the watchword – recognise that short term returns may be limited and that short term risks are likely to be higher than is priced in.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Global equity markets moved higher again last week with the S&P 500 Index reaching its forty second all time high for the year to date.   At the same time, implied volatility (measured on the VIX) remains near record lows.  It still leaves us feeling a little nervous – especially as the last significant market correction was so long ago.

Economically, the world still seems to be in good shape and it is this background that is giving investors confidence. The US led the global recovery and remains furthest along the cycle.  In fact, research by Société Générale highlights that the 100 months of expansion seen in the US economy is the third longest run since 1854.  Any sign that this cycle is ending would give us the shivers about the end of the bull market.  So far, as we have said before, this is not something we envisage.  That said, on current valuations, it is getting harder to see how much more progress US equities can make.

This side of the Atlantic, the British media continues its obsession with Brexit and the Conservative Party’s perceived woes. Europe, though, has other things to think about, not just the bad stuff like the Catalan crisis, there is good news too – for example the surprising strength of the French economy.  Against this background it is little surprise that the pound has remained under pressure.

We remain optimistic in the medium term whilst more wary in the short term. This is not a new feeling for us but, so far, our fears of a pull back have not materialised.  As a result, we continue to adopt a prudent approach to investing new money and are focusing on progressive investment on bad days.  Those fully invested need steady nerves – micro timing markets is a fool’s game and our longer term optimism suggests remaining committed to risk assets is the right thing to do.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Despite a background of ongoing geo-political issue, financial markets were pretty calm last week. Depending on whether one’s outlook is bullish or bearish this was seen as either a pause for breath after recent rallies or a sign that complacency has set in ahead of a setback.  If the VIX is to be believed, expectations for volatility remain very low – although we know how quickly that can change.

In the US, the Federal Reserve made its position very clear in its announcement last week. It has some USD4.5 trillion of Treasuries and mortgage backed securities and has now set out how it plans to reduce this – the buzz phrase is ‘balance sheet normalisation’.  At the same time, there were also clear messages that growth is solid, that inflation will be lower than expected at 1.5% and that another rate hike is likely before the end of the year.  All in all just the sort of clarity that markets like.

In Europe, today has been all about the German Election. Doubtless there will be more column inches on this but at least it makes a change from the tedium of Brexit coverage.  We are still positive in our views on Europe as an area for investment and this does nothing substantial to change that position.

We have also heard that there will be an early election in Japan. It has been reported that Japanese Prime Minister Shinzo Abe will dissolve parliament on Thursday.  And he has announced a stimulus package.  Yes, the usual paraphernalia.  This time it will be two trillion yen and focus on debt reduction and education.

Overall we still remain optimistic for most equity markets – albeit with modest expectations for returns in the short term. So what has happened to our sense of unease over valuations?  Well, it has not gone away.  At the moment, though, it is hard to see a clear trigger for a systemic pull back.  Although, would we really expect to?  For now, cautious optimism is the order of the day.  We continue to commit new money to areas where we have the highest conviction – frontier and emerging markets, Asia and Europe.

 Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Perspective

Another North Korean missile fired over Japan and the Japanese equity market turns in one of its strongest weekly performances for some time. The positive tone was echoed in the US – despite some softer economic data – and in Europe, too.  In the UK, though, where the Brexit rumblings drag on and on, the FTSE 100 Index pulled sharply back.  This was, apparently, fears over the impact of a stronger pound.

In the UK, there seem to be two views emerging. On the one hand, there are those who see Brexit as a rapidly looming calamity with consumer spending and the pound set to collapse, international trade drying up, a recession the inevitable result and interest rate rise an act of self-harming.  On the other are those, such as the Centre for Economics and Business Research, who today pointed to a more optimistic outlook, suggest the worst of the consumer slowdown is over and argue that a small rate rise is prudent to control inflation.

We do not entirely agree with either viewpoint. Yes, Brexit might – probably will – cause more problems.  But we see these as short term.  Equally, we do believe that it is going to be tough to escape entirely unscathed economically from Brexit and imprudent rate rises would not go down well.  There is simply to much speculation and dancing around the issues at the moment.  Was the fall in the FTSE 100 Index last week really down to fears over the value of the pound?  We do not think so.  Blaming the pound made a good excuse to bank some profits and blow a bit of froth off the market – probably no bad thing.

Once again, our worries over valuations and the prospect of a systemic pull back have not proved correct. That is good news as we have, despite a slightly more defensive positioning, remained risk on.  With our positive view of the world in the medium term we continue to favour equities.  The difficulty remains where to put new money to work?  For now we would propose our higher conviction markets – Asia Pacific, Europe and emerging markets.  Elsewhere, look for bad days to build positions.  And do make sure there is an appropriate allocation to lower risk assets and diversifiers such as gold.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Perspective

Equity markets had little direction last week as the reality of the horrific power of hurricanes pushed Korean sabre-rattling of the headlines. The flow of economic data provided little direction – the European Central Bank leaving rates unchanged coming as absolutely no surprise whatsoever.  Amid all this, demand for US Treasuries picked up and the 10 Year yield fell to 2.06% whilst the US dollar hit its lowest level since early 2015.

We still remain wary of both equity and bond markets at current valuations. It is fair to say that we have had this feeling for some time and have talked often before about why we have adopted a more defensive stance.  The key questions are has this stance been justifiable and has it caused us to lose out on any opportunities?

As far as we are concerned the answer to the first question is a resounding yes. Stepping away from the day to day for a moment and looking at the scale of some of the challenges markets have faced recently leaves us in no doubt whatsoever.  We have acted prudently and will continue to do so.  But what about missing out on the opportunities?  We do not feel we have in any meaningful way.  Key equity markets have largely traded sideways and we have kept an overweight equity position anyway.  The area that has powered ahead has been emerging markets – and these are our biggest overweight position.

So we are eying up the coming final quarter of the year with mixed feelings. From a purely parochial perspective, we are increasingly nervous about the UK and whether there may be a technical recession in the coming months.  Our view of the consumer related sectors has reinforced this and we would be wary of adding to UK equity positions at this time.  The rest of the world looks more interesting.  The systemic equity pull back we expect would be welcome for those with new money to invest and should, as we have said before, be viewed as an entry point by them.  For the rest, keep focused on the longer term and avoid tying to get too clever with market timing.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Hydrogen bombs going off are not normal events but global financial markets shrugged off the latest big bang in Korea and equity markets, in particular, moved higher.  Whilst fully valued – or even expensive in many cases – at least the flow of economic data is supportive of this.  Nonetheless, we are still expecting something of a pull back.  Perhaps, in the region of 5% to 10%.  This leaves something of a quandary – to stay invested or to de-risk?

In fairness, we have been here before. In fact, it was only last year that we wrote, “Normally one would hope to have an alternative to richly valued equities – but bonds are expensive too.  That means it is very difficult to see obvious places to put your money.  What felt like a cosy and optimistic consensus a few months ago is now starting to feel more like nervous inertia.”  Definitely a bit more than déjà vu – but then we did go on to say, “Unless you expect a full blown meltdown – and we do not – then focusing on acquiring good quality assets at favourable prices remains the smart thing to do.”

A year on and we can only reiterate that point.  We have talked a lot recently about why we remain positive in the medium term despite some shorter term nerves.  It is the opportunity presented by such nerves being translated into a pull back (or correction or whatever else you want to call it) that should enable the acquisition of those quality assets.  The word quality matters, though.  We have seen only too clearly how quick the market is to punish companies that lack it and fail to deliver.

Our past really can inform our future.  Last year we said, “Our strategy has been put in place to address these current uncertainties. J udicious diversification, including positions in gold and cash, means that we have the ability to ride over short term bumps without panicking.”  Frankly, this approach remains sound. There will be problems thrown at markets – whether they are big bombs or more political skullduggery over Brexit.  Focus and common sense need to be applied and, as usual, that focus needs to be on the wood and not the trees.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Having started the week in a positive mood, equity markets then slipped back.  For a change, it was not worries over the Korean crisis, but US politics.  But in such relaxed – or should that read complacent – times, the slip back was hardly a massive move.

The Trump presidency has now lost its chief strategist, communications director, chief of staff, press secretary and campaign manager – and we may as well throw in an FBI director, a national security adviser and an acting attorney general.  Politics is not our job so, unlike some sections of the media, we will not sneer at his travails.  But we do, like many others, question whether the delivery of an agenda planned to be a strong boost to the economy can be delivered in whole – or even in part?

So, how much did the expectation of such a boost support the US equity markets recent highs?  Who knows.  Equally, were the reality to be a lesser – or no – boost, then would that undermine valuations?  Again, that is too speculative.   What we do know is that a forward price/earnings of 17.7x puts the S&P 500 at historical highs.  Goldman Sachs highlighted that the cyclically adjusted price/earnings, at 29.7x, is at “a level only reached twice in history – before Black Tuesday in 1929 and the bursting of the Dotcom bubble in 2000”.  We do not see now this as a portent of doom – but it does reinforce our view that valuations are expensive.

Clearly, a re-ignition of the tension in Korea would rightly eclipse such political worries.  We find ourselves in the same position as previous weeks.  That of having one optimistic eye fixed firmly on solid economic data and a good set of second quarter reports in the recent earnings season, and of a more wary eye monitoring shorter term events that may shake things up a bit.  Or even quite a lot.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority.  This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current. 

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Gosh. Are we still here?  Clearly nuclear Armageddon did not take place.  The crisis in the Korean peninsular rumbles on but markets – so far at least – have remained sanguine.  As one writer put it, “How do you price extinction?”  Equities pulled back a bit last week in many cases.  A couple of percentage points does not equate to a ‘risk off’ crash but it does blow some of the froth off what were feeling like rather stretched valuations.

The underlying macro data remains largely positive. This morning saw Japanese growth beat expectations – only for equity prices to fall as the yen strengthened.  No pleasing some people.  The minutes of the US Federal Open Markets Committee which sets US interest rates are due this week.  Rather like the non farm payroll data these seem to be an almost irresistible source of fascination to some as they pour over them trying to discern the Committee’s next move.  Or lack of it.  Frankly, it’s a bit like rummaging around in the shrubbery looking for a lost cricket ball.  Possibly interesting – but unlikely to be wildly illuminating.

We are still cautious – not just because of madmen with bombs but recognising that there are other potential triggers for the run in equities to reverse in the short term. Cautious, but not pessimistic – and such a pull back would be seen by us as an opportunity to put money into the markets.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority. This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Equity markets continued to move higher last week, with European and UK equities doing notably well-  albeit hardly a vertiginous climb.  Once again, the driving force seems to be the ongoing flow of good macro data.  This included solid GDP numbers in the Euro area and an increase in the US non farm payrolls.  This latter data gets picked apart like a chicken’s entrails in the search for an insight into the Federal Reserve’s next move.  It is hard to see whether this is really worth the effort.

In terms of central banks, the sense was that previous ‘hawkish’ comments had given way to a more ‘dovish’ stance.  Or, in other words, the waffle continues.  The UK is a good example of this.  Apparently household debt, which used to pose a threat to the economy, is now not such a big deal according the Governor of the Bank of England.  At Société Générale, Albert Edwards clearly disagrees seeing “slumping household saving ratios in both the US and UK” as an “impending disaster.”  In our view, it is an additional factor to consider amid fragile UK consumer sentiment.

The low level of volatility is also in our thoughts.  We have always held the view that volatility simply tells you what has happened and that it is a very poor indicator of future expectations.  That said, we have also written before about asset valuations being high.  Combing the two leads us the view that pricing models that use historical volatility as an input, such as those used in high yield debt markets, may well be mispricing assets.  And our fixed income team reiterates their view that sovereign debt, the ‘risk free’ indicator, is mispriced too.  So our dim view of bonds continues – stay short duration and stick to quality.

So, little has changed since last week.  Our view remains exactly the same – optimistic for economic growth and equity markets in the medium term but wary of a pull back in the short term.  New money going into the market should follow the highest conviction opportunities – such as Asia, emerging markets and Europe.  For those invested, check your positions – do you need to rebalance?  Risk management is vital and preventing excessive positions building up is at the heart of this.

Regulatory Notice

European Wealth is a trading style of European Investment Management Limited (registered number 06931664) which is incorporated and registered in England and Wales with registered office at Ellenborough House, Wellington Street, Cheltenham, Gloucestershire GL50 1YD and authorised and regulated by the Financial Conduct Authority.  This message contains information that is confidential and privileged and it must not be distributed to any third party either whole or in part. If you are not the intended recipient, please advise the sender immediately and delete this message. This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current.

Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof.

Our Investment Update

Despite US equities hitting more record highs, overall global equities were flat last week.  The big mover was oil, which reacted strongly to news that Saudi Arabia and Russia would cut production.  Volatility remained very low and the summer holiday mood seems to be prevalent.

That summer holiday mood can also be seen in the media.  Dramatic headlines saying that consumer debt is going to destroy the economy may sell newspapers but is it actually a reality?  It is an interesting question.  The easy answer would be to dismiss it out of hand.  But sentiment does matter and if it gets rocked and consumers stop spending then it is going to have an effect on the economy.  There is, of course, the risk of a cycle of economic weakness undermining sentiment etc. etc.  This uncertainty is precisely the reason we took profits on our UK equity positions and brought them back to neutral.

We have been wary of an equity market pull back for sometime and it has not happened.  Nonetheless, we remain of the view that this period of low volatility will come to an end and that more exciting times lie ahead.  Why describe them as exciting?  For the simple reason that whilst there is the possibility of a pull back, volatility works in two directions  and there is also the chance of a sharp upward move.  After all, not all surprises have to be unpleasant.

So is our big news that the market could go up or down?  No, the point is that we remain optimistic in the medium term but that risk management is all important.  And that does not mean de-risking and pulling out of equities.

Regulatory Notice

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Risk Warnings

The investments discussed in this message may not be suitable for all investors. European Wealth does not guarantee the performance of any investments. Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. European Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted Investors

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