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We welcome not only a new year, but also a new decade.

At the start of last year, we stated that in our opinion, the main risks were Trade, Brexit and Central Banks.  Last year was arguably dominated by Central Banks, with a synchronised easing around the globe, most notably in the US, where Jerome Powell executed a complete U-turn, neutralising the previous rate hikes under his tenure.

The baton has now been dramatically passed to politics, which in general behaved quite sensibly in 2019: the elongated drama surrounding trade with China and the US eventually got to Phase 1 and, in the UK, Brexit progressed up the next rung of the ladder.

However, 2020 has brought political uncertainty back to the fore.  The hangover had barely dissipated when news that a drone strike by the US had killed one of Iran’s most powerful generals.  The obvious fear is the assassination will ignite another major conflict in the Middle East, after Iranian Supreme Leader Ali Khamenei promised: “severe retaliation”.  What form this will take is again, uncertain, but some sort of cyber-attack looks the most likely, particularly as we enter the US Presidential Election year.

Will Iran be the protagonist in this year’s election, as Russia allegedly became in 2016?  The US Election was already high on the list of risks for 2020, along with many other political situations around the world, however this has certainly been escalated in our views.

Experience has taught us not to make knee-jerk reactions.  This becomes increasingly difficult for the investor, with the media’s continued use of more volatile headlines, which are hard to ignore.  Their remit is to get you to click on the article; our remit is to ensure you have a robust investment process as your foundation.

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