The Economy

In this month’s investor update, Beth Igglesden, a client services associate here at Nutmeg, speaks with our chief investment officer, James McManus, about a volatile month for markets in November and what this has meant for Nutmeg portfolios.  

The global economy has had a wild ride during the past 18 months. Cycles are always exaggerated during shocks, and the remainder of 2021 will continue to surf the tail-end of what we would describe as a macro-data wave created by last-year’s shutdown. Still, with the gradual re-opening of businesses, both in the UK and the US, we expect growth to moderate to more sustainable rates.

‘Stagflation’ is a word that you may have heard bandied about by economic commentators lately. Stagflation is an ugly word in economic policy circles, combining, as it does, ‘stagnation’ with ‘inflation’. And while Stagnation is never a positive thing, as we have often said, inflation is not necessarily bad. And considering that central banks have spent the last decade trying to induce higher inflation expectations, why, you might ask, the sudden panic?

Over the past 30 years, global manufacturing supply chains have become more complex and more integrated as globalisation gathered pace and global trade volumes surged. The western world has become accustomed to sourcing raw materials and finished goods from emerging markets, where cheap labour and low freight costs made offshoring supply chains attractive in a world of increasing cost pressure.  

A decade ago, Nutmeg was founded with an ambitious mission: to democratise wealth management by empowering nations of investors. Through technology innovation, hiring the best and brightest people and always pushing to do things better, we’re transforming an industry to help many more people achieve their financial goals and secure the future they want for themselves and their families.  

In June 2020 we gave a non-consensus view that inflation definitely ‘had a future.’ Now that inflation has begun to rise, we ask whether inflation has indeed found its feet. We conclude that inflation a little above 2% over the long term is a natural part of global economic healing; not only from COVID-shutdowns, but also healing that was still not complete following the 2008 financial crisis.  We have positioned our fully managed customer portfolios accordingly, with inflation hedges in equities, gold and an under-exposure to rising bond yields. We do not anticipate a disruptive period of high inflation but do expect some temporary higher readings this year due to the low 2020 base-effects.

In this month’s investor update, our head of product, Max Rae, speaks with our chief investment officer, James McManus, about global economic data that continues to show an improving picture, the latest in US-China trade relations and what we’ve seen from companies reporting their first quarter company earnings, as well as taking a look at our portfolio performance. 

For Nutmeg’s April investor update, our senior technical lead Shaun Stone, spoke with our director of investment strategy Brad Holland about stimulus fruition, tech stocks, the US and China, emerging markets and rising bond yields, as well as taking a look at our portfolio performance. 

Since the pandemic there has been a lot of talk about the road to economic recovery and the importance of economic stimulus. But what exactly is stimulus in this sense, how is it coming about and what does it mean for you, the private investor?

Geopolitical, social and ecological ruptures have become front of mind for politicians, businesses, the media and financial markets over the last few years. Long–term investing can often take for granted the continuity of prevailing global systems; specifically, the reliance of finance on natural resource access, established supply chains, technological capabilities and political stability. In this special Nutmeg report, we discuss the possibility of global financial disruption as the result of a developing rivalry between the United States and the People’s Republic of China.  

With an outcome that will shape the near-term political agenda of the world’s largest economy, the US election is as important to markets, finance and investing as it is to geopolitics; not least in the midst of one of the sharpest economic downturns in history and a global health pandemic. It is therefore worth us explaining our view on the US and how and why we have the investment outlook we do.

Following a record bounce back in August some global markets were back in positive territory year to date. However, Brexit pressure, the US election and a rising second Covid wave all loom on the horizon. Back in the office for this month’s socially distanced update, our chief investment officer, James McManus, joins our savings and investment specialist and head of PR, Kat Mann, to discuss all these themes and how they’ve impacted Nutmeg portfolios.