Duncan Gwyther: How will profits hold up?

The lack of effective political leadership, combined with renewed fears about global growth, resulted in the retreat to perceived ‘safe havens' gathering pace in August.

While the US debt downgrade was not unexpected, the continued absence of any commitment to tackle the sovereign debt crisis triggered sharp downgrades to GDP forecasts. Recent events have not changed our long-term view of the global economy. Financial markets are facing a cyclical slowdown within an overall structural shift in the balance of wealth between developed and emerging economies. For the developed world, this is not a typical economic downturn where inflationary excesses towards the end of a cycle are purged by tightening monetary policy. It is about the sustainability of th...