It’s a real puzzle. US equities are back near all-time highs, implying that company sales and earnings should be strong over the next year or two. But yields on US treasuries are the lowest they’ve been since mid-2016 and the Federal Reserve is talking about cutting interest rates, suggesting that growth will be weak for a while.

So, should we expect the bull market in US stocks to continue? Or is a recession imminent?

We think US equity investors were too fearful last December, but now they’re firmly back in ‘greed’ mode – and overly optimistic about future returns. While global growth is trundling along at about 3.3% in 2019, company margins are coming under pressure and our financial models indicate that US equities are expensive by long-term standards.

By contrast, bond investors are too pessimistic about the likelihood and severity of a global or US recession. We don’t see anything scary enough on the horizon to justify allocating much to an asset like German 10-year bonds that offer only -0.3%.

Likewise, the UK 10-year inflation-linked bond yields -2.5%. HM Treasury guarantees that if you lend it £100, it will pay back only £78 in real terms after 10 years. We struggle to understand why anybody would ‘cough up’ for this.

One of the biggest unknowns, though, is politics. The Trump tweet-torrent is having an ongoing impact on the global economy – trade between China and the US has slumped and companies everywhere are becoming more reluctant to invest abroad. Rising policy uncertainty worldwide is bad for long-term growth and is a challenge to investors.

In summary, we have a small underweight to both equities and bonds. We also hold some cash and we are content to wait for exciting opportunities to arise.

At Hamnett Wealth, we are always up-to-date with what’s happening so we can provide the best possible advice to our clients. If you would like our advice, please contact on us on 0114 235 3500 for a free, no-obligation review.