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Rathbones Market Update Seminar Summary

Posted Monday, 17 June 2013, 3.06pm

For those of you who could not attend our seminar last Monday, I thought you would like to hear about David’s views on what’s happen to the economy in the UK, Europe and further afield.

David Coombs is Head of Multi-asset Investing at Rathbones and we were very pleased that he found the time to visit us in a busy schedule which has recently taken him from Guernsey to the Shetlands in one week! David spoke about the economic outlook and how the investment strategy for his funds at the moment.

I’ve put together a brief overview of the presentation, which unfortunately rather lacks David’s sense of humour and range of accents to bring it to life!

The UK

Where are we today?

  • The world is awash with central banks printing money
  • Debt is still out of control
  • Japan’s lost decades an inspiration, many similarities
  • Austerity strategies are badly implemented, no real cuts at all - the deficit is still growing
  • Politicians are feeling vulnerable and focused on re-election rather than fixing things

Feeling pretty good?

  • Equity markets are buoyant
  • Bond markets have not fallen for nearly 20 years
  • House prices are rising in the US and UK
  • Unemployment has peaked in the US and UK
  • Q1 UK began to grow again
  • We did well at the Olympics!

However the UK does not feel better off...

  • Our savings yield almost nothing
  • Our wages are declining in real terms
  • Non-discretionary prices such as energy and food are rising faster than RPI
  • Retirement seems to be an ever more distant event
  • Higher university fees hit the middle classes…again

Plan B?

  • Probably will be called something else, but a change of direction is required nonetheless
  • More welfare cuts
  • More infrastructure spending
  • Start cutting taxes
  • Lower commodity prices
  • Lower inflation
  • Business confidence is improving

So what about elsewhere?


  • Emerging America – revitalised manufacturing and industry in central northern America (the rust belt) – a good bet. David is investing here
  • Realistically bring manufacturing home – China can’t complete as easily now
  • Ready-made consumer market

China Slowdown

  • Reduced exposure to China
  • Wage inflation in double digits
  • High energy and distribution costs
  • Still no real global brands
  • Poor demographics
  • Economy needs to rebalance


  • Is it worth another look now?
  • Immigration low
  • Women in work low
  • Birth rate low
  • Corporate attitudes unchanged
  • Reliance on external energy source after nuclear problems
  • The market is not cheap
  • Nothing really changed, so no reason for David to consider investing

Europe – Oh dear!

  • Breakdown in France – German relations
  • No growth plan
  • A central bank with limited tools
  • Democratic deficit
  • Uncoordinated fiscal policy
  • Banks with weak balance sheets

It could be worse - WE could be in the Euro!

Where do we see real gains...

  • America
  • India
  • Malaysia
  • South East Asia
  • Bond and currency markets

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