This is not an easy environment to invest in
The global economy gives. The global economy takes away. Make sure your portfolio is set up to deal with it all.
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The global economy gives. The global economy takes away. So Germany is finding its economy is stuttering as demand for its exports falls (manufacturing orders from foreign countries were down over 9% year-on-year in December). And so the UK is finding. Most commentators have been quick to at least partially blame Brexit for the miserable news about Honda. But it's a tough position to defend.
The truth is that the global car market is changing (sales are falling, diesel is finally all but dead, one reason for the surging price of palladium) and the role of the UK is changing with it. That's not to say that uncertainty over Brexit isn't having an effect on investment in the UK economy (albeit an unquantifiable one), it's just to say that for now at least global shifts are probably having more of an effect.
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On the plus side, while the UK looks like it will be losing jobs in the car-manufacturing sector overall, it is doing a pretty good job of creating them elsewhere. The unemployment rate is now a mere 4% the lowest reading since the mid-1970s. Even better, this tightening of the labour market is finally feeding through into real wage rises with wages rising at a nominal annual rate of 3.4% and inflation sitting at around 2%, workers' pay packets are at last growing faster than the cost of living.
There's good news too in UK politics. As Matthew Lynn points out, it is long past time for a Parliamentary shake up. We have too many taboos and spend far too much time dodging talking about them (think the NHS, the state of our infrastructure and our universities, tax credits, the way national insurance isn't really insurance, and so on).
The new Independent Group mighthave been prompted by Brexit (beingagainst it appears to be the only thing its members have in common), but once that path is set perhaps they will morph into a force for real change or at the very least prompt a long overdue conversation about real change. Here's hoping.
A world of iffy GDP growth, mostly high-ish valuations and rising inflation risk (those wages rises are not confined to the UK), does not create an easy environment in which to invest. With that in mind, we emphasise the value of diversification, and then in our cover story we look at the value of forestry as a real asset diversifier for the long term.
David Stevenson looks at two interesting income funds thatcan help you build inflation protectioninto your portfolio, and Matthew Partridge looks at why you shouldn't shun housebuilders just because house prices are falling (nothing is ever that simple!).
Finally, if you really want to take diversification to an extreme, it turns out that superhero comics can help.
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Average UK house price reaches £300,000 for first time, Halifax saysWhile the average house price has topped £300k, regional disparities still remain, Halifax finds.
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Barings Emerging Europe trust bounces back from Russia woesBarings Emerging Europe trust has added the Middle East and Africa to its mandate, delivering a strong recovery, says Max King
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Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
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Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
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How to tackle rising inflation and falling stockmarketsEditor's letter Inflation is rising around the world. Even though inflation is widely expected to return to around 3.5% next year, it is still wreaking havoc. Merryn Somerset-Webb explains what to do about it.
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How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
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Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
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The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
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The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
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Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
