With the central banks, there is a policy divergence that is happening between the major nations, he added. “There are the areas where the rates are likely to go up, which is the UK and the US at some stage, and then the areas where the rates are likely to remain stable which are Japan and the eurozone. And then the rest of the world where rates are falling, such as India and China,” he said.
Global growth is slowing down and was 3.2 per cent in 2014 and less than 3 per cent in 2015, although developed economies are making progress, Mr Irvine believes. “We are agnostic on the timing of a rake hike,” he said, adding that the US Federal Reserve might miss the bus, but December’s door remains open.
On oil prices, Mr Irvine said it is still down by 60 per cent from where it was in the middle of the last year. Pointing to the current oil prices at below $50 (£33) a barrel, Mr Irvine said it is not obeying the traditional rules of supply and demand.
“The central theme to what is going on – especially in commodity prices – is that for a long time we have been relying on China globally as a marginal consumer for the world commodities for much of a decade,” he said. When the supply and demand gets imbalanced it creates major problems.”
On China, he said the main problem the market has is that as a whole he does not believe the numbers. “For the first and second quarter consecutively, the Chinese GDP was reported at 7 per cent. In the second quarter, looking at the all the other data that was coming out we realised none of that married up with the 7 per cent growth,” Mr Irvine explained.
He further added it may well be that the headline figure is actually right but for the rest of the world (which cannot access the rapidly growing parts of the economy), some of it may be irrelevant. “The bit that is relevant to us in terms of global growth, demand and commodity is significantly low in number.”
The Chinese government cut interest rates six times in the past 12 months and devalued its currency by 4.5 per cent in August. “It suggests that the Chinese too are slightly worried.”