Investors often fail to distinguish between uncertainty and risk. This is partly because there is an army of strategists advising investors how to manage risk through market narratives. These narratives attempt to explain away the complexity of the world we live in, giving the impression that uncertainty can be managed. Although listening to stories is fun and can make us feel confident about the future, investors need to embrace uncertainty to generate robust returns rather than listening to those who attempt to explain it away. A perfect example of this has been the liability driven investment (LDI) approach taken by

Since peaking in January, Fathom’s Economic Sentiment Indicator (ESI) for the euro area as a whole fell for two straight months. It remained broadly flat in April at 1.3%, as the downward trajectory of weaker survey data across the bloc continued into the second quarter of 2018. Refresh the chart in your browser | Edit chart in Datastream Digging deeper into the country detail uncovers more of a mixed bag, as small increases in France and Spain were offset by declines in the other series, particularly in Germany. Refresh the chart in your browser | Edit chart in Datastream Weak Ifo and PMI readings

Last month we passed the tenth anniversary of the financial crisis – an event that turned conventional wisdom about how economies operate on its head, and exposed widespread risks in the financial system that had previously gone unchecked. This led to a repricing of risk across the board. While policy uncertainty across major developed countries increased since the financial crisis and subsequent euro sovereign debt crisis, and remains historically high, the same is not true of the standard deviation of stock market returns, or other volatility measures such as the VIX. The VIX index is a measure of market-implied expectations

On Wednesday, we presented an overview of our Global Economic and Markets Outlook for 2017 Q3. The focus of the event, which was hosted by Thomson Reuters in London, was the UK economy, for which Fathom’s outlook is considerably more pessimistic than most. We were joined by former Bank of England policymakers Sir Charlie Bean and Sir John Gieve, both of whom share our concern about the UK’s deteriorating growth prospects. Refresh the chart in your browser | Edit chart in Datatream In our view, with the Bank of England’s Monetary Policy Committee having failed to pull the trigger at this week’s

This month’s UK general election result was an unmitigated disaster for the Conservative party. Indeed, it is hard to envisage a messier outcome. Weak and wobbly is the new strong and stable. Having failed miserably to deliver her campaign soundbite, Theresa May would typically have been expected to resign, as her predecessor, David Cameron, did after his unsuccessful attempt to secure a Remain victory in last year’s EU referendum. However, May has displayed the tenacity of a pitbull[1] in holding on to the keys of number 10 Downing Street, and her backbenchers, well-known for their ruthlessness in getting rid of

The Fathom StRRiM (Sterling Relative Risk Metric) has risen to its highest level this year, as uncertainty over monetary policy has added to existing political uncertainty. Refresh the chart in your browser | Edit chart in Datastream Want more charts and analysis? Access a pre-built library of charts built by Fathom Consulting via Datastream Chartbook in Thomson Reuters Eikon. Following this month’s Bank of England MPC meeting, and the announcement that three MPC members had voted to increase interest rates, last week we received important speeches from two MPC members. First, Governor Carney stated that “now is not yet the time” to begin raising

PM May surprised most people last week by announcing that the UK is to hold a snap election on June 8th. Outlining her motivation for calling an early election, something she had previously ruled out, PM May said “[T]he country is coming together but Westminster is not” Her concern is that such large and all-too-visible parliamentary divisions over Brexit hinders her government’s ability to get the best deal out of Brussels [1]. This all sounds very laudable – PM May putting the UK’s economic and financial interests before her personal political ambitions [2]. However, the move is not entirely selfless, it is

With UK Prime Minister having triggered Article 50, the starting gun on the two-year negotiation process precipitated by last June’s surprise Brexit vote has been fired. Even though the European Council President, Donald Tusk, published draft Brexit guidelines within 48 hours of receiving the official letter signed by PM May [1], investors can look forward (irony intended) to many months of uncertainty. As has been repeatedly stated, the final deal will be the result of hard negotiations and hence will be necessarily opaque for some considerable time (a viewpoint we outlined in a recent Market Insight [2]). Given how extremely messy and

This intimate, interactive forum brought together the Lipper Fund Awards winning executives, industry leaders, wealth managers, distribution professionals and investment advisors who are shaping the Canadian investment management industry, to discuss the global macro issues that will drive the economy and investments in 2017. Don’t miss the Keynote Interview with Eric Lascelles, Chief Economist, RBC Global Asset Management as he spoke with Robert Jenkins, Global Head of Research, Thomson Reuters Lipper. https://www.youtube.com/watch?v=dKxcGW1WoG8&feature=youtu.be Gain insight and catch up on the rest of the highlights of the afternoon by watching the three panel videos below: Panel 1: Is Uncertainty the New Black? https://youtu.be/594eanhbipg Big geopolitical