Quarterly outlook mostly positive
The Quarterly Outlook of Ortec Finance is cautiously optimistic about the economic prospects for the coming period. The global economy is improving, but there are reasons to keep the optimism in check.
The Quarterly Outlook is based on Ortec Finance’s scenario approach. The September 2017 edition incorporates all information that was available at that time. In the last quarter markets rallied globally, for the third quarter in a row. The rise is partly due to a favorable economic climate, a global recovery of growth, and low unemployment that is declining even further. Business and consumer confidence is high, while volatility is subdued. All in all, the state of the business cycle as well as its outlook have improved, but a mild contraction phase remains in sight.
Short-term expectations and downside risks
Expectations for the short-term are mostly positive. Economic growth is solid, inflationary pressures are low and fast interest rate normalizations are unlikely. At the same time, momentum in the markets is positive while the search-for-yield continues and there is no direct reason to fear a short-term correction.
On the other hand, there are reasons to remain careful. Downside risks remain high. Central bankers and investors base their decisions on the available information about the economy and financial markets, but presently one may doubt the reliability of that information. High debt levels and limited maneuvering room for central banks create vulnerability, while policy and (geo)political risks may provide triggers that could quickly change the positive short-term outlook into a more negative one.
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The complete September 2017 Quarterly Outlook can be found here. For clients a more elaborate version is available which includes risk and return across asset classes, regions and horizons.