Monday 21 April 2014 

Easter Monday 

Having been on holiday last week I go through a stack of newspapers. Admittedly, this may reflect a FOMO (fear of missing out) behaviour but on the other hand, news is pivotal in our business. One headline that grabs my attention is from the Financial Times on 9 April: “IMF cuts downturn danger to near zero”. Most of the readers will have liked this but for investors it means expected returns are falling: when risk is low, the premium for the risk will also be low. This is most visible in tight spreads between corporate and government bonds but also in equity valuations in the US. 

Tuesday 22 April 2014

Brussels 

I give a conference call presentation to the investment specialists from BNP Paribas Fortis on the market outlook. In summary: 1) We’re in a two-speed world (developed economies are witnessing a better environment whereas emerging economies are seeing slower growth than in the past); 2) monetary policy divergence is on the rise (Fed vs. ECB); 3) attractive valuation opportunities are becoming scarce (European equities, emerging equities and bonds); 4) volatility has moved up cyclically; and 5) there is a need to use active management to boost performance. Against this background, risky assets should benefit and we continue to be overweight equities and high-yield bonds.

Wednesday 23 April 2014 

Brussels 

I do my regular live chat on Reuters’ Global Markets Forum. Most of the discussion is on the recent strong performance of emerging markets but I emphasise that the index performance masks considerable differences between countries: just because acronyms like BRIC and MINT sound nice does not make them a good investment idea. As a result, the Reuters journalist tweets “can emerging markets shake off ‘acronym-itis’?” 

Thursday 24 April 2014 

Brussels 

At the annual meeting of the Belgian Association of Pension Institutions, I present the market outlook. During the Q&A, somebody asks when central banks’ bulging balance sheets will cause a big acceleration of inflation. I think inflation will pick up but only gradually. The excess reserves held by the central banks are huge and the velocity of the circulation of money has declined so the transmission from monetary policy to the real economy has yet to run its full course. Competitive pressure remains huge. The commodity outlook is neutral at best and finally, non-conventional monetary policy has had a big impact on asset markets. So yes, larger central bank balance sheets cause more asset price inflation, rather than goods and services inflation.

Friday 25 April 2014 

Utrecht 

I’m a panellist at the “Grip op je vermogen” conference, literally translated as “Grip on your wealth”. The full-day conference has attracted a huge crowd. The panel debate is very lively and is centred around five statements. The audience has received red and green cards to express their agreement/disagreement with each statement. On the question of whether the Dutch people are well prepared for a leaner welfare state, the answer is an overwhelming ‘no’. A sobering conclusion, and one which makes appropriate management of one’s wealth all the more important. The moderator asks what is the single most important thing to do in order to tackle these challenges. I respond by saying it is important to get a clear picture of current and future liabilities: managing your wealth means managing your assets against your liabilities so it is important to have a detailed mapping of the latter before even beginning to think about how to manage the former.  

 

William De Vijlder

Vice – Chairman of BNP Paribas Investment Partners