Global growth still looks healthy, but pressure has recently built up due to Donald Trump ’s tariffs on steel and aluminium imports from neighbours Canada and Mexico, as well as the European Union, prompting retaliatory measures. These actions have stoked fears that a trade war could escalate. Mitsuhiro Furusawa, deputy managing director of the International Monetary Fund has warned that a trade war could undermine confidence and de-rail global growth permanently.
According to Hermes Investment Management, protectionism and increasing levels of corporate debt across the globe are the two most serious challenges facing markets at the moment.
Trade wars aside, the main worry is that we have not learnt our lessons from the financial crisis of 2008, and there are interesting statistics to underline this:
- Reserve Bank of New York – the aggregate credit card limit rose for the 21st consecutive quarter.
- Total household indebtedness was $13.2trn at the end of March, a $63bn increase on the final quarter of last year.
- New extensions of credit for mortgage and car loans have increased each year since 2008.
- The average quality of globally held debt held globally has gone down year on year.
- Global debt levels exceeded $237 trillion a global debt record.
People often assume that for an investment to make a high return it must be esoteric, obscure and difficult to understand and undiscovered by other investors. On the contrary — the best investments are often the most obvious and this can only be achieved if investors focus on the companies which offer quality rather than any market commentary.
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