Wesentliche Kernaussagen (auf Englisch):
- 0% real return for a global passive 50/50 Equity/Bond portfolio over next 5 years (vs last 5 years and LT average of 4-4.5%) – and with a higher volatility
- Global (mild) recession sooner rather than later (likely trigger: collapse in capex), with much lower fiscal and monetary firepower than a decade ago.
- Globalization is in retreat and trade wars becoming the norm. Demographic trends are reversing just now: more spenders than savers (asset price < consumer price inflation)
- Inflation to remain muted forcing central banks & governments to rethink their policy framework (inflation targeting regime, MMT) – inflation expectations to rise
- China’s growth in secular decline but private consumption to be the biggest engine of global growth. China’s assets to re-rate as foreign demand rises. China become a financial powerhouse.
- Global equities ~5% return p.a. (end of business cycle, margins peaking, no downside in real rates)
- Government bonds 0-0.5% (real rates are still negative, valuation very expensive, debt levels and issuance high and credit rating lower, inflation risk premia low, implied vola very low)
- Over the very long term (10+ years), world equity return to be c 3.5% and world bond return c 1% - half the long-term average
- On a risk-adjusted basis, hedge funds will provide the best return (3.7%). Gold is best diversifier. Cash, EM local debt, UK Equities and EM Asia also on the projected efficient frontier
- Avoid European bonds, credit, US equities and private equities – all assets on the efficient frontier of the past 10 years.
- Best time ever to diversify away from US: US equities to underperform (by c 5% p.a. in USD terms) and USD to depreciate (valuation, shrinking growth differential, twin deficit)
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