Further thoughts on whether the global economy is slowing. To be frank, my position remains the same as it was in April; sit on the fence and wait and see. There is no evidence one way or the other, and with such a lack of clarity it is pointless taking any risks. The continuing surprise is that bonds are still outperforming other asset classes, but whether that is because of a slowing economy or capital outflows from emerging economies remains uncertain. What is certain is the rise in policitical risks, whether it is the Ukraine, Gaza or Iraq. The imposition of sanctions on Russia for its attempts to destabilise the Ukraine is most definitely bad economic news; trade will be reduced and living standards in Russia and also Europe will fall. The other serious concern is the slowdown in the euro economy in the second quarter, particularly in the three major countries. There are possible encouraging signs in Spain, Portugal, Holland but overall the picture is of zero growth and the prospect of deflationLooking at specific data, no clear picture emerges. The global PMI has risen a bit over the last few months and the outlook for emerging economies has improved this year somewhat against expectations, but on the other hand the OECD lead indicator, and the US ECRI index are both pointing to a bit of a slowdown. On balance, we can say downside risks for the global economy has increased a little but the bigger issue is the rise in policital risk.