Falling Oil Price Not Necessarily Reflective of Economic Conditions
The drop in oil prices that occurred at the end of May is not necessarily reflective of a change in economic conditions. Our proprietary Growth Nowcaster and oil prices have evolved together for some time now, and the economic growth deceleration of 2018 was visible in the price of oil as well. In May, the 15% collapse in the price of oil had a detrimental impact on the performance of many multi-asset strategies. However, in our opinion, it probably reflects more of the geopolitical game between China and the US rather than a potential renewed growth slowdown. Such shocks can last but are usually more temporary than demand shocks.
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