- The risks of a slowdown are higher than the upside.
- Fundamental trends are negative in advanced economies while emerging markets show higher growth rates and are cheaper.
- It is important to create a diversified portfolio with uncorrelated assets.
In an environment where it seems maximum potential for the U.S. economy has been reached, the St. Louis FED chief, James Bullard, has said in his most recent report that he favors only one interest rate increase through 2018, which would at best keep things stable. His view is further supported by the fact that the unemployment rate is sitting at below 5%, and the Personal Consumption Expenditures PCE inflation—measured by the Dallas FED—is at 1.84%, both of which signal that the economy has reached its maximum potential. More →