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What do the next 50 months hold?
Money Management celebrates its 50th anniversary with a special edition in April. With the next 50 years being a dot on the horizon, we talk to a range of fund managers about what’s coming in the next 50 months
Jacob de Tusch-Lec is manager of the Artemis Global Income fund, Chris Burvill is manager of the Henderson Cautious Managed fund, Gary Potter is co-head of Thames River Multi Capital fund and Ben Surtees a fund manager in Jupiter’s Far Eastern Equities team
What do you think will happen to inflation in the next 50 months?
Jacob de Tusch-Lec: Inflation will rise, but it will not be a linear process, the ride will be volatile. Inflation will be up but it will be longer before it happens, with a long period of deflationary pressures, such as high debt, high unemployment, wage pressures.
Gary Potter: Growth is likely to be comparatively anaemic for at least part of that period as the debt unwind continues. Inflation is the least worst option with the scale of the debt problem; I think it will need to be set at about 4%.
Chris Burvill: I think it is more than likely to rise and will still be around 5% by the end of that period.
There is no wriggle factor left on interest rates, there is no more slack to take up
Ben Surtees: Inflation in Asia has been trending downwards, it peaked in the last quarter of 2011. Further out the issue affecting Asia is the prospect of high inflation as all the major governments pump prime quantitative easing in unison, which obviously has an affect on inflation.
And what about interest rates in the next 50 months?
Ben Surtees: This will act in lock step with inflation. Most governments are working in coordinated policy; with no wriggle factor left on interest rates, there is no more slack to take up. Asian countries have worked independently as they have raised rates higher than the west.
Chris Burvill: It might lag behind inflation but it will still increase I think.
Jacob de Tusch-Lec: They will start to rise when the markets work out that there is money out there.
Gary Potter: I think they’re set to remain persistently low over that period, with maybe no rises at all. If there is an increase it will be marginal.
Will we enter recession again in the next 50 months or will the economy actually grow?
Jacob de Tusch-Lec: I think we have to get used to economic recession. I don’t think that there will be a smooth business cycle like there used to be. There will be no smooth recovery over the next 50 months - it will be a bumpy ride.
Gary Potter: We are likely to grow, there is a fairly slim chance of a meaningful recession and a greater chance that we start to pick up I think. The emerging markets and the US will be big factors in dragging Europe back into growth.
Ben Surtees: Asia went through its financial crisis in 1997/98, identical to how the west has played out in the past four to five years. The real difference is that Asia got its house in order, unlike the west which has propped up the patient.
