US Strategy 2016 10

A New Normal


  • Multiple deflationary forces are at play, namely: Aging population, automation, China slowdown and cheap energy sources. This will keep growth at low levels for the foreseeable future.
  • With the bigger picture in mind, we believe that the world is entering a NEW NORMAL. This era of protracted low growth is here to stay. This also implies that the previous boom and bust cycles may come to an end. Maybe this time is really different.
  • Regardless of a rate hike or not, this rate hike cycle will be very, very slow. Given our macro view, substantially low interest rates are here to stay for the next five to ten years.
  • We envision that the US stock indices are going to grind higher, but at a VERY, VERY SLOW rate. In the new normal, investing in an index fund will yield returns that are below previous historical returns.

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