While structured products may benefit investors that seek principal protection or have a differentiated view from that of the market, they are not normally the best investment choice due to their high costs and complicated structures.
European markets are not setting up for a standout 2008.
It looks increasingly like U.K. property has seen its highs for this cycle.
While exposures to “toxic waste” debt are tough to pin down, European financials face a tough road ahead.
For the time being investors should avoid large bets on European property and should be in no hurry to ramp up allocations.
While rising real yields have restored some value to European inflation-linked bond markets, linkers are not yet attractive on their own, although do offer some value relative to nominal government paper.
Going long the European restructuring/growth story has gone from a contrarian play to a consensus trade.
Excess cash may lead to increased dividends and share-buyback activity, if M&A activity doesn’t lay claim to the money first.
While small caps may be able to climb higher amid the current liquidity-driven market, valuations clearly point to an unfavorable risk-reward trade-off relative to large caps.
While continued pound strength would weigh on unhedged cross-border U.K. investors, it should not crimp corporate profits so long as global growth stays strong.