Letter to Shareholders: Value Bonds Q2 2013

The reason for the introduction of ‘tapering off’ (the gradual ending of reliance on QE) in the US is that recovery is looking increasingly sustainable.

Demand for housing is strong and consumer confidence is spilling into areas such as auto sales which are now getting back to levels last seen pre-crisis.

Europe is improving but not as rapidly as the US and there will certainly be hiccups in the recovery process (as we have already seen with the Italian elections and recent events in Portugal.) Southern Europe has dangerous levels of ‘austerity fatigue’ which creates a greater risk of political uncertainty and ensures the continuation of a loose monetary policy.

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