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The winners and losers in the world’s financial markets so far in 2017

St Andrews University students pose inside a Snapchat frame during a foam fight known as Raisin Monday in the Lower College Lawn behind St Salvator’s Quadrangle following the Raisin Weekend

‘To refuse awards is another way of accepting them with more noise than is normal’ – Mark Twain

There is only one thing to do if you are writing an investment column on 31 March…and that is to give out some awards for the winners, losers, geniuses and failures in the world’s financial markets during the first quarter of 2017 based on my completely subjective personal view.

All lobbying, postal ballots and corporate hospitality must now desist.  Please.

The Excitable Investment Salesperson Because Markets Are Surprisingly Up award for most surprising equity market performance of the first quarter goes to…the Euro Zone equity markets which comfortably out-pointed equivalent markets in the UK and the US despite the spectre of political uncertainty and institutional angst.

With global investors now once again being net investors into these markets further outperformance could follow especially as the European Central Bank is keeping policy loose and the great populist fear appears overstated.

The Central Bankers Special Achievement Award is split this quarter between two legends of the area.

The first winner is Federal Reserve Chair Janet Yellen for staring down President Trump and showing interest rates can go up too.  She may decide to have another go later in the year but don’t expect three or four tilts at the monetary policy wheel as the US is not running as hot as some believe (economists) or some hope (incumbent politicians).

Bank of England deputy governor Charlotte Hogg during her first meeting with the Treasury Select Committee, at the House of Commons in London.

The second winner is Charlotte Hogg – still just about of the Bank of England – who provided some surprising comedy into Central Banking circles by forgetting that her brother worked at another bank.  It must have been the sheer excitement of working at an institution that has changed interest rates only once in the last seven plus years – a record that it likely to ratchet up another year at least – that induced such an oversight.

The Cash is King award goes to the new instant billionaires in the executive team of Snap, who managed to convince a range of middle-aged investment banker types who regard Facebook as edgy and are still fairly uncomfortable with the notion of tweeting, that a group of millennials sharing photos that disappear after a few seconds is clearly and undoubtedly the investment future…at a gargantuan stock market rating.

[graphiq id=”6FoFMUykDY1″ title=”Snap-A Rg (SNAP) Stock Price” width=”600″ height=”587″ url=”″ link=”” link_text=”FindTheCompany | Graphiq” frozen=”true”]

The Most Impressive Economic Statistic award once again goes to the team behind the Chinese GDP statistics which consistently show in their regional constituency parts a lower level than the aggregate declared statistic for the whole country.

Rumours that the sadly departed Paul Daniels acted as a consultant to aid any sleight of hand remain just rumours.

Still, at least the Chinese authorities are continuing with their reform of the country to make it look more like the over-borrowed, consumption-centric West.  For the time being investors should like this – maybe not a lot – but China will muddle through to the benefit economically of all.

Meanwhile the Money is Flowing the Wrong Way award unanimously went to index tracking passive fund operators who had material inflows during the quarter to further deepen the trend away from active management.  Funny how with the world getting more specific in both risks and opportunities the time for a proper outperformance run for more active non index tracking strategies is nigh…

The Have The Currency Wars Started Yet? award for strongest currency goes surprisingly to…the Mexican peso.  Yes, despite President Trump’s best efforts what went down has come back up (not completely of course) as investors took the view that it is easy to talk about walls and tariffs and bad hombres but the reality will be much more pragmatic.  And I would say it is not just a cheap place to make cars but also one to go on holiday…but from a British Pound perspective little outside of Turkey and the Ukraine look cheapish on a currency basis…

And finally (drum roll) the big one.  The winner of the Why Is Everyone Talking and Writing About it so Much award goes for the third successive quarter to…Brexit.

LONDON, ENGLAND – MARCH 28: British Prime Minister Theresa May in the cabinet, sitting below a painting of Britain’s first Prime Minister Robert Walpole, signs the official letter to European Council President Donald Tusk invoking Article 50 and the United Kingdom’s intention to leave the EU on March 28, 2017 in London, England. After holding a referendum in June 2016 the United Kingdom voted to leave the European Union, the signing of Article 50 now officially triggers that process. (Photo by Christopher Furlong – WPA Pool/Getty Images)

With every success and whimper of the UK economy correlated immediately with events from the end of June, ‘the B word’ has become an interpretative short-hand for absolutely everything.

Of course the reality is that relations with the UK’s biggest trade partners do matter but the reality will all come out in the wash in later 2018 and early 2019…and that reality will be a fudged compromise that will probably ultimately please few but take away the grinding risk of trade wars and deep economic recession.

Expect the Pound to continue quietly creeping up and for those more domestic UK shares to offer the biggest stock picking scope.  Great times?  Absolutely not – more like workable ones.  Don’t expect the UK economy to win any awards soon…but it will not be completely panned either.

To read more from Chris Bailey (see below)

Chris Bailey has over 20 years of investment industry experience at long-only and long-short institutions as a global multi-asset fund manager, strategist/macro thinker and, in the earlier part of his career, as a securities and fund analyst.

In 2013 he founded Financial Orbit focusing on daily macroeconomic comment and securities analysis. In December 2016 his Twitter account (@financial_orbit) was named as one of the ’50 accounts investors should follow in 2017’. 

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