Vimal Gor

Head of Bond, Income & Defensive Strategies

Income & Fixed Interest Newsletter – August 2018

Trade wars are front and centre for markets at the moment and no amount of ink is being spared writing about it. While many have tried to quantify the effects of trade wars on economic growth, it’s pretty much a waste of time as it is attempting to simplify the effect of a monumental change on the way that modern multinational corporates do business.

I am certain we are watching a key turning point in history unfold right in front of us. The way things have been done on the global stage over the last 40 years is changing at a lightning pace, as politics, diplomacy, immigration and trade relations are all in a state of transition. The dominant economic theory – commonly referred to as neoliberal economic theory – is no longer the playbook by which world leaders run their economies, and the new playback has many blank pages. This will have further significant effects on fiscal discipline and debt management as governments feel their way forward, obviously impacting economic growth and inflation. All of these factors will then have a subsequent effect on the role of the central bank, as the focus shifts from the independent and inflation targeting model that has been the status quo for the last 20 years. The rules of the game are changing.