Lord Rothschild: The New World Order Is at Risk
The comments below are an edited and abridged synopsis of an article by Tyler Durden
Lord Rothschild has said that the US-China trade war and the Eurozone crisis are the key problems putting economic order at risk, and the lack of a common approach has made co-operation today much more difficult.
With global risks growing, Rothschild writes that “in the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution.” In the first half, RIT had a net quoted equity exposure of only 47%, historically low. The Rothschilds are concerned that the 10-year bullish cycle and market rally could be ending.
While Rothschild noted that many of the world’s economies have enjoyed a broad-based acceleration not seen since the financial crisis of 2008, with as many as 120 countries seeing stronger growth last year, he cautioned that this is not a time to add risk.
There is also the threat that the global trade war escalates substantially from here, as Chinese stocks have learned the hard way.
Rothschild also echoed the warning from the head of the Indian central bank, warning that the shrinking of global dollar liquidity is hurting emerging markets.
Finally, Rothschild remains concerned about geopolitical problems including Brexit, North Korea and the Middle East.
Rothschild continued the shift away from US capital markets exposure announced 2 years ago, noting that his exposure to absolute return and credit assets continued to generate steady returns and on currencies, the net asset value benefited from the strengthened US dollar.