PRESS CENTRE

Economic Outlook: can things ‘only get better’? In his latest Economic Outlook, Senior Economic Adviser Neil Williams summarises his expectations for the global economy. 08/04/2021

Three wishes for tomorrow’s UK Budget Eoin Murray, Head of Investment, shares his three wishes for tomorrow's UK Budget 02/03/2021 - Eoin Murray

Under Pressure? 5 dynamics shaping the inflation outlook Silvia Dall'Angelo, Senior Economist, discusses the five dynamics shaping her inflation outlook for 2021. 26/01/2021 - Silvia Dall’Angelo

Economic Outlook: 2021 and beyond - a slow and winding road to economic recovery In his latest Economic Outlook, Senior Economic Adviser Neil Williams summarises his expectations for the global economy in five main points. 15/12/2020

Looking into 2021 with Federated Hermes Senior management, the investment floor, EOS and our responsibility office share their outlooks for next year. 19/11/2020 - Saker Nusseibeh, CBE

Federated Hermes' latest on the US Elections Managers across our investment floor in London and Pittsburgh comment on the US Election 05/11/2020 - Eoin Murray

Federated Hermes comments ahead of US Election Federated Hermes comments ahead of US Election 28/10/2020 - Eoin Murray

Economic Outlook: will the debt matter? The US and UK are already running highly negative interest rates, when QE is considered, according to a report by the International business of Federated Hermes. 11/06/2020

Quarterly Economic Outlook: Keeping the punch bowl filled In hard macro terms, the tragic spread of the coronavirus provides another argument for keeping policy rates close to the floor, and the ‘punch bowl’ of central-bank liquidity filled. 18/03/2020

They Walk Among Us – The Extended Cycle Of Zombie Firms 31/10/2018 - Eoin Murray

How markets are missing the biggest populist movement of all 29/10/2018 - Saker Nusseibeh, CBE

Escalating trade war is biggest risk for world economy The trade tariffs – and corresponding retaliatory measures – implemented are so far limited. In total, the value of affected trade now amounts to about $150bn globally, or 0.8% of overall world exports. However, adding up all the measures currently under discussion and assuming impacted countries retaliate commensurately, the amount of targeted trade could quickly rise to more than $1tn, or 6% of global exports. In her latest Ahead of the Curve, Silvia Dall’Angelo, Senior Economist at Hermes Investment Management, argues an escalation of protectionist measures evolving into a trade war could represent the biggest challenge to the world economy. 13/08/2018 - Silvia Dall’Angelo

Fixing Big Tech – saving the FANGs from themselves Despite phenomenal long-term share price performance, Big Tech has been besieged from all sides – governments and regulators have been forced to increase scrutiny, investors are questioning the future economic consequences, while consumers question the FANGs’ social licence to operate. In response to the major issues faced by Big Tech, Sickly Tech, a report by Eoin Murray, Head of Investment at Hermes Investment Management, raises deep questions about Big Tech’s future, the risks for investors, and outlines the necessary steps to drive reform. Even the market ruckus earlier this year failed to derail the trajectory of the Big Tech leaders. Instead, the market witnessed dramatic outperformance by Big Tech and the FANGs (Facebook, Amazon, Apple, Netflix and Google), which benefit from the ongoing growth in internet commerce. Indeed, if the FANGs (plus Nvidia and Microsoft) are stripped out, the S&P 500 has fallen over the year to date - such is the influence of their phenomenal momentum. Even from a global perspective, the FANGs are a vital positive story, with global markets overall having fallen slightly in 2018. 10/07/2018 - Eoin Murray

Hermes: Overly protective In his latest Quarterly Economic Outlook, Neil Williams, Senior Economic Adviser to Hermes Investment Management, argues that markets are still taking a ‘glass half full’ view of the macro outlook, with little real consideration of the new risk emerging. Until now, this has made sense, with speculation the US would open the fiscal box having justified ‘reflation trades’. However, while better for growth (see chart 1), markets are ignoring the darker cloud looming. Rather than financial distrust, we may need to brace for political distrust with the threat of beggar-thy neighbour policies - from the US to anti-European populism - rising. 2018 could be a ‘year of two halves’... In which case, 2018 could be a year of two halves, where stimulus- euphoria gradually gives way to stagflation concern. Helpfully, the trade-off is that policy rates stay lower than many expect. As chart 2 attests, the world’s appetite for international trade has, as a share of GDP, more than doubled in the past 50 years. Nevertheless, without care, the unhelpful jigsaw piece of retaliatory protectionism from the 1930s, might come crashing into place. In 1930, it was triggered by the Smoot-Hawley reforms that raised US tariffs to up to 20% on over 20,000 imported goods. This hit the US’s relatively small number of trading partners, most notably Canada and Europe, and prolonged the depression. 15/06/2018

Modest rate rise by BoE seems a one-off muscle flex Neil Williams, Group Chief Economist at Hermes Investment Management, reacts to today’s Bank of England (BoE) rate hike decision: Today’s quarter-point rate hike shouldn’t raise eyebrows, and looks for now to be a one-off ‘muscle flex’ by the BoE, rather than the start of an aggressive tightening. What it does is reverse the post-referendum cut from 15 months ago, which, with activity broadly holding up, may have been an unnecessary safety-net. In the MPC’s eyes, it also gives them more rate ‘powder’ to use, should the economy later start to slow again. But this is of course circular and the Bank will be mindful that raising rates too far does not cause that economic downturn! Moreover, in the absence of a recovery in real wages - which have been squeezed for a decade - I doubt they will hike aggressively. Their hope is that productivity begins to lift from 2018, justifying higher wage claims. If it does, they could admittedly then get twitchy fingers. But one of two factors working against that is inflation which may have peaked. Should the pound plummet again and/or protectionist forces build, inflation will admittedly accelerate. But, it will be the ‘wrong sort’ – cost-push, rather than ‘feel-good’ demand-pull. This portends more to the inflation rises of the early 1980s and 1990s UK recessions, than the overheating of the late 1980s and mid-2000s. In which case, the inflationary flame may snuff itself out. 02/11/2017

Should investors be scared of heights? Equities are scaling new peaks, driven by what appears to be a market-friendly first-round result in the French presidential elections and Trump’s renewed talk of tax cuts, but Eoin Murray, Head of Investment at Hermes Investment Management, warns that investors should look through the near-universal positivity for signs of risk. In the US, for instance, the tech-toned Nasdaq breached 6,000 for the first time, while the Dow Jones retook the lofty 21,000 barrier it originally claimed this March. But can risk assets sustain a rapid ascent to greater heights? 04/05/2017 - Eoin Murray

Beggar thy neighbour... In his latest quarterly Economic Outlook, Neil Williams, Group Chief Economist at Hermes Investment Management, believes that markets are taking more than a ‘glass half full’ view of the macro outlook, with little consideration of the new risk emerging. In the short term, this makes sense, he says, as speculation, rightly, that major economies will open the fiscal box is sparking ‘reflation trades’. 02/03/2017

Euro-zone – time for Plan B... The ECB’s decision prior to Christmas to extend QE for another nine months to December 2017, though ‘taper’ it from this April, does not herald an early tightening of economic policy, according to Group Chief Economist Neil Williams in his January Ahead of the Curve. Quite the opposite in fact, with the key deposit rate likely to stay negative in 2017, and the fiscal side activated. 2017’s extra QE easily surpasses the combined GDPs of Greece & Portugal... Tapering means more QE. By tapering its monthly asset purchases from €80bn to €60bn, it’s still looking to inject an extra €540bn in QE. This easily surpasses the combined GDPs of Greece and Portugal. Central banks can now buy bonds that yield lower than the -0.4% deposit rate. However, the nuance, is Mr Draghi’s growing encouragement of governments to take the baton back from the ECB. A lesson from Japan is that QE provides cash to lend, but cannot force consumers and firms to borrow. The euro-zone thus looks halfway down the Japan route. It too may be running unconventionally loose monetary policy (QE and negative rates) to get its currency down, but has yet to let go of the fiscal reins. 05/01/2017

More - not less – QE means this is not tightening Some today will be disappointed that Mr Draghi is planning to taper the ECB’s QE from next April. But Neil Williams, Group Chief Economist at Hermes Investment Management, believes they shouldn’t be. First, tapering means more, not less, QE, and even though he’s closing the tap a notch in April, the ECB’s liquidity sink is still filling up. By tapering its monthly asset purchases from €80bn down to €60bn, he is still looking to inject an extra €540bn in QE. To put this into perspective, this easily surpasses in equivalent terms, the combined GDPs of Greece and Portugal for example. 08/12/2016

Six beliefs driving our macro outlook for 2017... In his latest quarterly Economic Outlook, Looking into 2017, Neil Williams, Group Chief Economist at Hermes Investment Management, sets out the six core beliefs that lie behind his macro view of 2017. After a year of political surprises, we could see tectonic shifts in economic policy. Speculation, rightly, that major economies will open their fiscal box is currently causing ‘reflation trades’ to puff up growth assets, raise inflation expectations, and make the 30-year bull-run in government bonds look even staler. 07/12/2016