Fear that US tax corporate reforms would be put at risk by the failed repeal of Obamacare created a volatile couple of weeks for equities. But after the seesaw, the end result? Markets were unchanged. This ties-in with the thesis that investor sentiment is strong and global equities will therefore continue their move higher through Spring and Summer, even if not always in a straight line.

In the previous update, we highlighted that the main macro-risk to keep in mind is slowing consumer spending. Economic data this week showed that US consumer spending was once again soft again last month, contracting slightly in real terms. While worth monitoring, it is not a cause for concern at this point - it is still within the normal historical range of responses to higher inflation, a process which partly involves the transfer of economic benefits from consumers to business.

From a very micro perspective however, it does seem inconsistent that within equities the Consumer Staples sector has outperformed over the past few months. We have a low weighting to this sector in our portfolios as a result, and I would expect that we’ll the group generally lag markets somewhat through Spring as Q1 earnings reporting starts.