Sebastian Lyon, founder and CIO at Troy Asset Management, has warned there is potential for both bonds and equities to fall during the next downturn as a result of unconventional monetary policy over the past nine years driving up all asset prices.
Speaking at Morningstar's Investment Conference, Lyon said markets were hugely reliant on the success of monetary policy, with a policy mistake from one of the four major central banks remaining the biggest risk to markets. He added US President Donald Trump's "aggressive" fiscal easing through his $1.5trn Tax Cuts and Jobs Act reform meant there would be fewer levers to pull during the next downturn. "The irony of Trump's policies is he appears to be setting the country up for an even worse fall as and when we head into the next downturn," Lyon said. "As we head into quantitative ...
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