Erwin Lasshofer about Financial Markets Today

Where do the stock markets go in the next few years? Erwin Lasshofer and INNOVATIS are often asked this question. It is crucial in both equity and bond and markets, and even for commodities. The economy is slowing down but running. In other words, in the US, we expect GDP growth of 2.9% for the current year and still 1.8% for 2020. In China, the value of 6.3% falls to 6.0, Japan and the major economies in Europe continue to struggle for any significant growth. So far so nothing new compared to previous years.

 

However, economic growth does not automatically lead to satisfied investors. It rather takes descending interest rates and rising corporate profits. And there are regional differences: on a five-year horizon, earnings per share in China have virtually not improved, while they have gained 40-50% in Europe and the US. Still all regions are equal in one earnings aspect: decreasing levels in recent weeks and months.

 

Does the US still have a good reason to feel disadvantaged by China in international trade and threaten punitive tariffs? The INNOVATIS team of Erwin Lasshofer thinks: nobody actually cares these days! Both China and the US want to expand their supremacy in the world and currently put at risk global trade relations and even world peace. The term economic warfare makes the round.

 

Both inevitably leads to welfare losses. However, insecure framework conditions and tariffs result in losses of a few percentage points of growth. On the other hand warlike disputes lead to unequally higher economic costs. Human tragedies not included.

 

For some years we have been experiencing an increasingly aggressive rhetoric on the stages of the world. By staging an external threat, unfortunately, votes can always be caught and internal criticism silenced. Unfortunately, the leaders of great many nations provide a bad examples these days, e.g. in USA, Brazil, Russia, Turkey and in many more. Thus there is some real threat of increasing tensions and violent disputes in the world.

 

So what should investors expect from the global economy in the future? First, an ongoing tendency to nationalism. Localization or de-globalization will cost growth and all stakeholder lose. Second, an increasing number of conflicts, scary, irrational and unexpected. Erwin Lasshofer sees more volatility ahead and limited market upside in the near term – for both stock and bond markets.

 

INNOVATIS sees structured products, particularly in the category yield enhancement, as the best alternative to provide clients with positive and estimable returns. Clients can take advantage from a range of tailor made solutions. The easiest way benefit from our asset management services is the managed account.