Q4 2017: Opportunity Amid Global Uncertainty
November 2, 2017
WE Family Offices Managing Partner Santiago Ulloa was a featured guest on CNN en Espanol’s Globo Economia discussing global wealth insights, specifically the apparent disconnect between the back-and-forth and general unease in Washington, and the soaring stock market which has continued to rise amid the uncertainty. After three quarters of rising valuations and strong performance, investors are left to wonder what to expect in the fourth quarter. While much is uncertain for the last part of the year, most analysts are particularly interested in rising employment levels along with rising salary levels and inflation, which could be strong indicators of the U.S. Economy’s overall strength.
In addition to global political change, the world has seen an unprecedented summer of natural disasters, including devastation caused by hurricanes, earthquakes, wild fires and flooding – the effects of which are still being measured. Paired with global political risk seen accompanying a rising tide of nationalistic sentiment, investors are left in wait-and-see mode.
While overall, the global economy is strong, according to global wealth insights, the primary source of risk for investors comes from geopolitical uncertainty. Santiago discusses the European Union, including the effects of “Brexit,” elections in France and Germany, civil unrest in Spain, economic problems in Italy, and the overall policy of the EU towards withdrawal. Overall, the economic conditions in Europe are strong, and improving, and appear to have some more room to rise.
Discussing Asia, rising middle classes and a relatively young population with increasing demand will continue to support the region’s growth.
When looking to what investors might be able to expect in the current quarter – and where they could see investment opportunity – the global wealth insights conversation covered a continuation of the status quo, with high investment costs and low risk in the domestic public equity markets. Investors should be cautious of high-yield investments, but continue to look at distressed companies and, perhaps more importantly, opportunities in the private markets and private debt. While investors should use caution when entering these less transparent and less liquid markets, the potential for long-term returns is often much higher. While families should work with trusted advisors who are able to guide them in the due diligence of these investments, they are often able to find opportunities that are generally unavailable to the broader markets.