Our flagship publication, Economics for Investment, is just released to clients. It uses our SOLVER model to assess the economic outlook and draw out investment implications (Stage of the cycle, Outlook, Leading Indicators, Valuations, Expectations and Risks). Recent 'hot' US inflation data underline that reducing US inflation from its current 3-4% rate to the target 2% may prove difficult. The key is wage growth which is still too high. Until either inflation resumes its decline or economic growth shows signs of decelerating below its trend rate of growth (2%) the Fed will remain on hold. The risk that the Fed's next move is up has increased. This poses a risk to the US stock market which is on high valuations.
The publication includes views on the US, China, Euro zone, UK and Japan. The Focus section looks at exchange rates and outlines a way to analyse and understand them using measures of 'fair value' allied with relative interest rate trends. For a complimentary copy of Economics for Investment please email info@tricio-advisors.com