Earlier in the year we wrote of 2017’s Lucky Generals. The phrase, attributed to Napoleon, is that it’s better to have lucky generals than good ones. We were, of
course, referring to two modern day generals, Donald Trump and Theresa May, both of whom were fortunate enough to take the reins at a time when the economic outlook was changing for the better. The quote has proven apt. Few would describe the achievements of the pair as anything close to good. In fact they have fallen woefully short of expectations. And yet, circumstances have conspired to ensure that their shortcomings have proven largely irrelevant in terms of the economic outlook and investment markets, though not in terms of their political prospects. In this note we highlight the key economic developments of 2017 thus far, and briefly review the resulting investment market experience. We conclude that, while the improved outlook for the world economy is very welcome and has been profitable for investors, the key secular themes that have dominated developments in the world economy since the turn of the millennium remain in place, and therefore investment risk remains fairly elevated. In our view, political developments in reaction to these drivers will need careful monitoring as we move into 2018.
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