Outlook & Convictions n°2 - January 2018

Analysis - 1/24/2018

Edmond de Rothschild publishes the second edition of its House View.

This publication presents Edmond de Rothschild’s key convictions for macroeconomics, asset allocation strategy, and the principal asset classes. The summary of this document is below. 


Global growth defying gravity

  • US growth could edge up further in 2018, fuelled by the roll-out of the tax cuts agreed by the Republicans …
  • … and might be able to pick up some of the slowdown in GDP growth left by China
  • Central banks is likely to continue to control interest rates and “manage” asset prices


Will the Goldilocks story continue on financial markets?

    • Asset allocation: we prefer equities to bonds
    • Equities: caution advised early in the year; add to positions on a pullback
    • Bonds: interest rate risk high; discrimination needed in credit


Don’t feel obliged to invest in bonds

  • Long-term rates are feeling mild upside pressure
  • Risks and opportunities are both very limited
  • Our preference goes to subordinated financial bonds


More muted equity return outlook with higher volatility

  • From here, a continuation of benign macro conditions is crucial for further equity price appreciation
  • Sticking with our preference for European shares
  • Rotation away from technology and growth shares likely but this may not be enduring


A bit of theory on asset bubbles

  • Low interest rates make fertile ground
  • Human nature plays a not inconsiderable part as well
  • Every bubble is unique but they all have the same structure

Drafting finalised on 10 January 2018


This brochure was prepared by Edmond de Rothschild Asset Management (France). The following entities, including their branch offices and subsidiaries, limit themselves to making this brochure available to clients: Edmond de Rothschild (Suisse) S.A., located at 18 rue de Hesse 1204 Geneva, Switzerland, subject to the supervision of the FINMA, Edmond de Rothschild (Europe) S.A., located at 20 boulevard Emmanuel Servais, 2535 Luxembourg, Grand Duchy of Luxembourg, and subject to the supervision of the Luxembourg Commission de Surveillance du Secteur Financier (CSSF), and Edmond de Rothschild (France), Société Anonyme governed by an executive board and a supervisory board with a share capital of 83 075 820 euros – RCS Paris  572 037 026, located at 47 rue du Faubourg Saint-Honoré 75008 Paris.

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This document has not been reviewed or approved by any regulator in any jurisdiction. The figures, comments, forward looking statements and elements provided in this document reflect the opinion of Edmond de Rothschild Asset Management on market trends based on economic data and information available as of today. They may no longer be relevant when investors read this communication. In addition, Edmond de Rothschild Asset Management shall assume no liability for the quality or accuracy of information / economic data provided by third parties.

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47, rue du Faubourg Saint-Honoré - 75401 Paris Cedex 08 - France

Société anonyme governed by an executive board and a supervisory board with capital of 11.033.769 euros AMF Registration number GP 04000015 – 332.652.536 R.C.S. Paris