Credit Suisse Asset Management: the next decade becomes disastrous for savers and fund-management industry

Recently in financial markets current situation will be a serious threat to the fund-management industry, The next decade will be lousy for investors said Jonathan Wilmot, head of macroeconomic research at Credit Suisse Asset Management, compared today's environment to the aftermath of the Latin America debt crisis, the 1930's Great Depression, and the 2008 Great Recession.

Jonathan Wilmot give complete description, Here's the upshot: After an initial multiyear recovery in stock and bond prices after a crisis (the rally we saw through last year) comes a long stretch of lousy returns.

Credit Suisse Asset Management Wilmot said that would be "disastrous" for savers and posed a serious threat to the fund-management industry.

Consider this part of the "easy money has been made" meme. A key factor is that financial shocks lead to secular reflation, which is to say that governments typically embark on inflationary measures such as public spending to stimulate the economy. Spending more to growth economic

This call secular reflation, By secular reflation, we mean at least a decade in which short- and long-term interest rates stay habitually below nominal GDP growth and high grade bonds are not really bonds any more: delivering trend returns that are close to zero or even negative. Creating lousy markets and bearish stock market

Why becomes important secular reflation, Reflation is essentially a structural subsidy from savers to borrowers, and normally favors equities over bonds. After both previous major crises — when private and public debt levels were relatively high — slower debt growth, selective debt re-structuring and a long period of reflation have been the solution.

As reported from Wilmot explanation, Given current demographics, one can probably add to that various types of soft default as governments gradually renege on some of their healthcare and retirement promises.

What about the historical data, History shows that the first seven to eight years after a crisis (think 2008 to 2016 in this case) tend to deliver above-average returns for bonds and stocks, according to the report. Equities sink to a low at the height of the crisis and then recover, and bond yields trend down as central banks look to stimulate the economy. Maybe the growth for next decade becomes slowly but it's oke if still growth

Source: Credit Suisse Asset Management Jonathan Wilmot