One thing is sure: fixed-income securities look a safe haven

THE GLADSTONE Library in what was once the National Liberal Club is a magnificent room, its walls bedecked with books from floor to a giddily lofty ceiling. It was a suitably tenebrous setting for a discourse on global investing, given the present state of markets.

As a curtain-raiser, Capital International, the leading US fund manager, told professional investors present that its planned presentation had been torn up. Worrying, you might think. Actually, it was a remarkably comforting experience.

The nub of its bullish argument was that the Goldilocks scenario in the US remains intact. The thrust of this is that the US is moving into a budget surplus. Treasury bonds, currently in strong demand, could become in short supply if the US government is repaying, rather than creating, government debt.

What is more, American bonds do not look bad value on anything other than historic comparison. Inflation at 1.5 per cent seems in little danger of rising, so the real return is around 3.75 per cent, rather higher than for UK gilts if you assume we suffer a modest risk premium. A buoyant US bond market is likely to do equities no harm.

It is true to say that the US is better insulated against external economic pressure than almost anywhere else. The worry for investment managers is if the American economy turns pear-shaped and we all suffer.

The professionals' view on Russia was also interesting. We all worry about the lack of government, the inability of the authorities to collect tax and the heavy influence of criminal element in the economy.

They pointed out that the most important source of foreign exchange to Russia is oil. Witness what has happened recently. If you take as a broad yardstick an extraction cost of around US$12 a barrel, the effective profit they are making on this important commodity has dwindled to close to 10 per cent of its previous value. All very frightening.

Add to that the knowledge that other commodities - also falling in value - make up the bulk of Russia's exports, then it seems little wonder the country is in the mess it is. It doesn't help you make money, but at least it explains why things are as tough as they are.

Of course, no investment manager - even one dealing exclusively with professional investors - is interested in talking the market down. Still, I did draw comfort from the reasoned arguments they presented. It may not make me rush into the market, but it certainly helps me from panicking. Who knows, it may even be right to buy emerging markets soon, although there was little comfort to be gain from their view on South-east Asia.

The global market-place has become a phrase much bandied-about, particularly as the problems in Russia have deepened. The Russian Premier was only being realistic when he said that the clock cannot be turned back. One side-effect of this is the considerable volatility we now have to suffer in markets.

Trying to change the situation artificially - as we see happening in South-east Asia with exchange controls in Malaysia and government intervention in the stock market in Hong Kong - is unlikely to do any good in the long term.

So we approach the autumn with a degree of nervousness - not unbounded but remaining until we have some real evidence that the turmoil in those markets outside Europe and North America is not damaging growth prospects too deeply. At least buyers are emerging on bad days, from which we can take comfort. One thing seems certain though, fixed-income securities, both in the UK and the US, look a safe haven at present.

Brian Tora is chairman of the Greig Middleton asset management committee

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookA wonderful selection of salads, starters and mains featuring venison, grouse and other game
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    Commercial Litigation Associate

    Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

    Systems Manager - Dynamics AX

    £65000 - £75000 per annum + Benefits: Progressive Recruitment: The client is a...

    Service Delivery Manager (Software Development, Testing)

    £40000 - £45000 per annum: Ashdown Group: A well-established software house ba...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little