• The case for European equities
    With the S&P 500 up nearly 20% year-to-date, U.S. investors can be forgiven for maintaining a home country bias. Consistent with the post-crisis norm, 2019 is shaping up to be another year when U.S. equities beat the rest of the world. That said the case for international diversification remains sound, in part because other markets are also producing stellar returns. Year-to-date, some of the Chinese equity indices are up more than 20%. And to many investors’ surprise, another bright spot… Read more »
  • The importance of income today (and our bond market views)
    Central banks are shifting toward monetary easing, as they seek to cushion a global growth slowdown sparked by rising trade tensions. This policy pivot should extend the long expansion, we believe, creating a supportive backdrop for income-generating assets. We see income, or carry, as the key driver of bond market returns in today’s low-for-long world, as we write in our new Fixed income strategy All about income. The Federal Reserve now looks ready to trim rates as insurance against any slowdown.… Read more »
  • In search of income in emerging market debt
    Central banks are shifting toward monetary easing, as they aim to cushion a global slowdown sparked by trade tensions. This policy pivot should help stretch the cycle and has depressed long-term yields, creating a supportive backdrop for income-generating assets. One such asset we favor: local-currency emerging market (EM) debt. The decisively dovish turn in global monetary policy this year has helped drive bond yields to the bottom of recent ranges. See the dots in the chart above. We expect low… Read more »
  • What big data is saying about the Fed
    It’s summertime and the central banks are … well, easy. The Fed’s pivot to a more dovish monetary policy stance since May has been followed by a generalized move among other central banks in the same direction. Rhetoric from Fed Chairman Jerome Powell has been closely watched and markets have largely cheered the idea of lower policy rates―starting with a hoped-for cut at the end of July. Yet there’s a big “but” to consider. The fact that this pivot has… Read more »
  • A Q3 investor watch list
    Proceed with caution, but by all means … proceed. This was the overarching message in our third quarter equity market outlook. We believe U.S. stocks can grind higher in the new quarter, underpinned by strong fundamentals and an economy that is still growing ― albeit nearing the final legs of its multi-year expansion. The rebound from late 2018 losses was robust in the first half and evident across sectors, as shown below. The second half is unlikely to be a… Read more »
  • 3 investing ideas for the second half
    One change to our 2019 investment outlook as the second half of the year kicks off: We now see trade disputes and broader geopolitical frictions as the key drivers of the global economy and markets, rather than late-cycle recession risks. In light of this view, we have downgraded our expectations for global growth and updated the three themes we see shaping investing, as we discuss in our midyear 2019 Global investment outlook. Geopolitical tensions have heightened macro uncertainty, leading to… Read more »
  • Fog of (Trade) War
    After a rollercoaster two months of headlines about trade wars and tariffs, once again the market finds itself in the familiar position of not knowing what to think about the long-term effects of the U.S.-China trade dispute. But it does recognize this: that substantial progress on trade requires much more than an agreement on how many soybeans China purchases from the U.S. Muddling the issue – and further inflaming investor anxieties — is the U.S. government’s threatened use of tariffs… Read more »
  • An overview of our midyear outlook
    We see challenging crosscurrents ahead. Macro uncertainty is rising amid geopolitical frictions, and asset prices are up. Yet monetary policy has pivoted toward easing and many risk asset valuations still look reasonable. This leads us to lower our growth outlook and become modestly more defensive while still favoring selected risk assets. We are downgrading our growth outlook as trade disputes lead to a wider range of potential economic and market outcomes. Tough rhetoric from both the U.S. and China, tit-for-tat… Read more »
  • Why to watch geopolitics in the second half
    Market attention to geopolitical risks has reached its highest point since 2005. Recent years have seen a populist, anti-establishment surge across the western democracies, a reemergence of great power rivalries, and intensifying global trade disputes. The number of volatile geopolitical situations is at one of its highest points since the end of World War II. Such geopolitical events can have meaningful effects on the global economy, financial markets and investment portfolios. In fact, we see geopolitical risk as a material… Read more »
  • The trade war in the context of broader themes
    Myopia in life/death and in investing The leading causes of death in the United States, by an overwhelming margin, are heart disease and cancer. Yet one would not be able to tell this based on the share of mass media air time these illnesses received. If we had to guess, we’d judge that this relative lack of attention was due to the longer time frame these illnesses often take to play out. In reality, the media spends an overwhelming majority… Read more »
WordPress RSS Feed Retriever by Theme Mason