The key driver to financial markets for the first quarter of 2016 has been a combination of a weaker dollar, expectations that interest rates will stay lower for longer and a further downward revision in earnings growth in major developed equity markets. To top it all S&P further downgraded China..s debt. The broad impact of this dynamic was stronger EM currency movements, a rebound of 18% in Brazil..s equity market, a 15% decline in China..s equity market, a solid rally in most bond markets with our own ALBI up 6.6% for the quarter. Commodity markets and commodity stocks in particular, rebounded strongly with the gold sector up 92% and platinum up 74% for the quarter. Most other markets reflected something of a ..V....shaped recovery in performance. Having declined quite markedly from the end of 2015 to around mid-February, they rebounded to end the quarter flat. US stocks have barely changed. The move in the gold price is certainly telling us something. Taking all the data together, it seems fair to suggest that the crisis of confidence in central banks....ability to move markets and the economy, remains intact.

The first quarter of 2016 has been less stellar than previous quarters as underexposure to mining stocks in general detracted from relative performance. The position has reversed somewhat in March as the core holdings resumed an upward trend after declining in both January and February.