If 2011 was the year where the markets the risk of sovereign debt on the periphery of Europe revalued, I fear that 2012 may mount the suite in the main countries which, until now, been seen as a refuge.
The show has begun, with yields on the public debt in countries such as apparently secure as the Belgium, Austria, Netherlands and the France with a port separation company remaining in the storm, Germany.
The good news, as is the case, is that this last phase of the financial crisis has the sensation of a late game. If a market crisis is needed to convince the extremists in Europe to accept that quantitative easing alternatives have been exhausted, this, finally, perhaps.
Two consequences of impacts of the contagion of the base are already underway. In Asia, investors lose faith in Europe and, in particular, in the euro area.
One of the surprising aspects of all disorders market this year has been the relative calm of the currencies of the world market. It is difficult to see the euro continues to hold its own as the crisis deepens. With time, a weakened euro will make European assets attractive to investors outside the region, but it is a way off yet.
Second, the sovereign crisis is starting to spill over into the real economy in the form of a credit crunch renewed. The banks are unwilling to lend to each other, and still less to companies and individuals, in an echo worrisome 2007 entry.
Indeed, the European Central Bank seems to have no problem persuading banks to deposit funds with it; they are the tail to park their surplus cash somewhere they can really trust. We all know what happened to the last time the credit markets closed this way.
The combination of the intransigence of German in the intervention of non-sterilized BCE, the reasonable desire by the banks to recapitalise by less loan rather that to sell shares at lower prices and a dogmatic on the austerity emphasis, austerity, austerity condemned Europe to the recession in the first half of next year.
Identification of the profits of the business and the pressure to lower the lower government bond will create a backdrop for equities test.
Then, how investors should look to survive 2012?
Intuitively, reasonable solution selling and waiting for the horrible things to go, is better in theory than in practice because, as the oscillations in a sense from 1975 to 2009 shown always, it is much easier to get the market to reinstate in time.
Calendar of the market in this way is not a feasible proposal; the market will turn when prospects are dark and psychological barriers to reinvesting more great.
A better way to get through the next 12 months is to position your investments defensively and with an eye on the recovery that will certainly follow.
Fortunately, the two approaches in the end, in some cases, in the same place.For example, the area less affected by the crisis in Europe, Asia, is also best to thrive when it is finally over.
The likely speed of recovery and the probability of which pass to the first point of Asia to a higher weighting in the region as most investors have today.
Closer to home, he there has never been better time to focus on quality - companies with the power, the strong balance sheets with little or no debt, exposure to these assessments made Beaver the rapid growth of emerging markets and are the place safe.
Yields above into the actions of many blue-chip companies will examine also particularly compelling if markets all weaken further. Their obligations look much safer than many Governments from now too.
Beyond the crisis of the next year, I expect that a significant risk of tail will be the bogeyman of the Germany, inflation. The difference between the yields of bonds linked to inflation and nominal, said deflation is the real concern, and in the short term, it may be. But once the printing presses are started, because they certainly can be, the price increases are a prediction safer than the end of the world.
Tom Stevenson is a Director of investment at Fidelity Investments in the world. The views expressed are his own. He tweets at @ tomstevenson63
No comments:
Post a Comment