What’s the outlook for the second half of 2024?

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Ultimately monetary policy inflation, the impacts between the relationship between inflation rates and yields has a fundamental impact on all asset prices. So it, you know, it is critically important and is part of our asset allocation framework on the things that we look at. Two of the things we look at, inflation and rates. So, you know, formally we do look at that.

What’s our outlook for the second half of the year?

Ultimately this is best guess no one knows. The theme that we’re running with at the moment is we’re giving risk assets and we’re giving particularly the names that are fundamentally supported in our portfolios, the benefit of the doubt. So, you know, we’ve covered it, but Goldilocks has challenged the political cycle once again, particularly in Europe, partly in the US as well as really highlighting polarisation. The UK actually interestingly, might well be swinging in the other direction as we speak but markets are now partly seeing some volatility and we could expect some volatility in the second half of the year depending what the policy outcomes of changing governments might be over time.

You know, to get to your question specifically, I think that the market will begin to price a Trump win in the next quarter, if that looks likely, which may mean higher yields, it may mean higher rate expectations or market prices thereof. Certainly in the short term.

Ultimately, earnings and free cash flow growth of the businesses that we own are supporting the share prices of those businesses. And that’s what I mean by giving them the benefit of the doubt. What we’re hearing from company management is they are hearing about all of this negative you know, macroeconomic backdrop and news, but what they’re seeing from their customer base is generally positive. That’s the last that we heard from them.

So we’re about to go through a reporting cycle now. So we’ll be able to update on that view. We continue to see a path towards lower inflation, a bit further out 12 to 18 month view as discussed. So we remain 52% in equities, roughly 20% in both alternatives and fixed income and 8% in cash.