Page 7

GOODNEWS July 2013

7 The second half of 2013 will be mostly about Fed Chairman Bernanke and whether he scales back his QE3 bond-buying programme to which financial markets have become rather attached. News that improving data had put taper-ing in sight spooked markets, reviving volatility and concerns about growth, but the Fed’s calming backtrack and flexibility on triggers/thresholds suggests tapering a way off and expectations being managed to avoid asset bubbles while global monetary policy remains loose. The ECB’s unused backstop, the BoE’s move towards forward guidance versus more QE, and the BoJ still in early days of massive stimulus, means the Fed in charge of the central bank volatility lever. Elsewhere, September elections in Germany have stalled Euro-zone discussions (Banking union, bailout redrafts, further integration) to avoid con-troversy and keep Merkel on-track for re-election. The relative calm of late may be lost when negotiations restart, with peripheral stresses bubbling up lately. A US debt ceiling revisit could spice things up unless Washington averts it, but we’ve been here before and another last-minute solution likely. Whether China slows further will also be watched in the context of global growth, although it had to slow eventually. As for the FTSE100? Although the solid start to 2013 was undone by Fed taper talk, the summer pause and sideways consolidation around 6600 could be the platform for recovery to May’s highs of 6875, itself within touching distance of the 6930 all-time highs of 1999. UK Q2 GDP data is already looking brighter and employment improving. Can the trend continue, driving the index higher? Michael Van Dulken, Head of Research Date for your diary: Market Outlook for 2014 Panel Session followed by ‘Lunch with Motty’ 13th December 2013 at Crowe Clark Whitehill LLP For full details email events@goodacreuk.com


GOODNEWS July 2013
To see the actual publication please follow the link above