Investment strategy outlook - October 2017

October 2017
Defined Benefit Pension Schemes
Overall our view at Cardano is that the global economy will continue to grow, but there a number of potential risks on the horizon to be aware of.

Our Emerging Market growth expectations, in particular, remain positive as global growth and the recovery in trade persist. In Europe, sentiment has improved across the region as a number of political risks (such as the German and French elections) have eased. US growth expectations also remain positive, as the labour market and domestic demand continue to be robust.

We are monitoring inflationary pressures

The US economy is running close to full capacity with employment levels approaching all-time highs. This may result in wage inflation which eventually could feed through into higher prices of goods and services. Some temporary factors, coupled with technology-related downward pressure on prices, might delay/reduce upside risks to inflation.

Nevertheless, there are a number of key risks on the horizon that could impair global growth

Some tightening by Central Banks could create additional volatility for risky assets. In addition a slowdown in EM (possibly driven by China) could have far-reaching global consequences. A number of political risks also remain with the Italian parliamentary elections in early 2018 and uncertainty over the future direction of Catalonia representing potential catalysts for renewed concerns over European political stability. US foreign policy in the Middle-East and the Korean Peninsula also have the potential to heighten global conflict.