Global stocks rebounded in the first quarter, but the ride was rocky. Even in a rising market, volatility is a clear and present danger. With so many risks clouding the outlook, we believe that investors should focus on generating a smoother pattern of returns.
n today’s low-growth, low interest-rate environment, investors should be patient, and look for opportunities to use volatility to get into desirable investments at the price you’re willing to pay.
Global equities rebounded sharply in the first quarter from the sell-off in late 2018. But conditions remain shaky and caution is warranted. Investors should pay close attention to policy-related risks when considering their allocations.
Signs of a recovery in emerging markets early this year have given way to worries about China’s economic slowdown and sluggish growth in Europe and Japan. But beyond the negative headlines we think many risks that weighed on the market last year have faded and the earnings outlook is relatively strong.
Many US companies have forgotten how to raise prices because they haven’t had to for a long time. In some sectors, such as retail, pricing power has been hobbled by the giant consolidated retailers, leaving other businesses unable to adequately offset inflationary pressures.
Last week’s meeting of the Federal Open Market Committee (FOMC) surprised even those who expected a dovish outcome. As the Fed wrangles with its policy framework, one takeaway is clear: don’t expect rate hikes this year—and possibly next.
As economic cycles enter their later stages, investors sometimes find that they’re taking too much risk to generate income. There’s a strategy that can help—and we think now is the time to use it.
Now that the UK has avoided (at least for now) a hard Brexit as it negotiates to extend Article 50, investors might reasonably wonder whether they can relax for a moment and take stock of the bigger picture. What sort of longer-term future does the European Union (EU) have, irrespective of the UK?
Just over a decade ago, global markets began to recover from the biggest shock in postwar history. These 10 charts show both how much has changed since then and how post-crisis market conditions may influence the next decade.
Nearly three years after the UK voted to leave the European Union (EU), the deadline for Brexit is less than two weeks away and the British government is asking for more time. While it’s easy to be distracted by the ongoing chaos in Parliament,
The US high-yield bond market has an impressive record when it comes to recovering drawdowns quickly. But how much can an investor who stays put reasonably expect to earn?
No one organization is responsible for the advancement of women, and that means every organization is. Women’s empowerment starts with education. It continues with the ability to earn an equitable living, especially in fields where women are underrepresented, and crests with women playing leadership roles at work or owning their own businesses.
Healthcare stocks served as powerful painkillers during last year’s market declines. Yet the sector offers much more than just downside protection for investors who focus on business potential and resist the urge to predict scientific breakthroughs.
After MSCI decided today to boost the allocation to Chinese onshore stocks in its emerging-market indices, global investors are likely to pump more money into the market. But watch out for crowds. Flows into China are concentrated in a small group of large-cap stocks.
A generation ago, China had little influence beyond its borders. Today, its importance to the world economy rivals the United States’. China’s role in markets is growing, too: in April, it will join a major global bond index. The future may bring a freely traded Chinese yuan and a challenge to the US dollar.
As MSCI considers boosting the allocation to Chinese onshore stocks in its emerging-market indices, global investors are pumping money into the market. But watch out for crowds. Flows into China are concentrated in a small group of large-cap stocks.
The euro area faces another challenging year, but we see a continuation of recent soft growth as much more likely than recession. The European Central Bank (ECB) is, nonetheless, now likely to delay its first rate hike to 2020, and could also implement fresh credit-easing measures.
Value investing has always been about challenging the consensus—but never more so than today. After several tough years, we’re seeing signs of a value recovery brewing. Yet fresh approaches are needed to capture the potential in today’s complex markets.
The Chinese stock market is changing at breathtaking speed and is on track to reach maturity faster than any other in history. Global investors have been reluctant to dive in, but there are good reasons to get acquainted with the companies serving the world’s second-largest economy.
How swift will the high-yield recovery be? How likely is it to be sustained? History sheds some light.
Should you be concerned that high-yield bonds didn’t predict last year’s equity market selloff? We don’t think so. In fact, we think investors should consider adding high-yield exposure to reduce overall risk.
Many US companies have enjoyed an earnings boost from premium products in recent years. But a strong sales mix may leave a company’s profitability vulnerable in the late stages of an economic cycle, when spending trends begin to weaken.
Countries and companies have been on a borrowing binge even as the growth of the working-age population in many parts of the world slows. Is a prolonged period of low growth and low inflation in our future?
The government shutdown and temporary displacement of some workers didn’t cause the strong US labor market to miss a beat. Today’s jobs report reinforces that gains have been accelerating. That’s good news for the economy and markets.
Municipal bond investors like their muni portfolios to play the role of Old Faithful in their overall asset allocation, providing safety and income. But that doesn’t mean that the investment environment is reliably the same. How can muni investors stay on track in 2019? They can adhere to these three strategies.
With Brexit headlines dominating the European news, equity investors face an ongoing challenge. Building resilient portfolios requires a clear view of the long-term outlook for European companies that also reflects major short-term political uncertainties.
Africa’s two largest economies will hold elections this year, and there’s a good chance the outcomes will lead to slightly faster growth and higher asset prices. But rising populism and nationalism remain a longer-term risk.
Equities declined around the world in 2018, and valuations fell sharply. The risks are clearly significant—but have stocks fallen too far? With earnings still expected to advance this year, we think selective investors can find attractive entry points.
The US government shutdown is almost four weeks old, and there’s no sign that the standoff will be resolved anytime soon. How much has the shutdown impacted—and how much will it impact—economic growth? That depends on how long it lasts.
It’s been two years since our initial research on populism, and populist-inspired policies continue to advance today on multiple fronts. As we see it, investors should expect more of the same ahead—influencing everything from global economic growth and inflation to policies directed specifically at the corporate sector.
Investors are likely to remember 2018 as the end of the era of easy money, low volatility and steady margin expansion. Investing will be more challenging in 2019—and diversification will be more important than ever.
As volatility returned to global markets in 2018, return patterns for equity styles were very unstable. With more signs of turbulence ahead, investors should prepare to reduce the impact of short-term factor swings on portfolio performance.
With US stocks facing multiple risks, it’s easy to lose sight of the positive trends that could help the market recover. In 2019, investors should search for select stocks with the right attributes to produce positive surprises in a potentially tricky market environment.
The past year was a rough ride for bond investors. Will 2019 deliver more of the same?
Yes, investor concerns are swirling around China’s economy and the gradual opening of its domestic equity market, but the long-term picture presents significant opportunities for active investors.
It’s taken for granted in financial circles that lower oil prices are a boon for stocks, as they fuel an economy-boosting cycle in which money saved at the pump ultimately flows to the market. But oil prices that are too low could be too much of a good thing.
There’s no sugarcoating it: 2018 was hard on emerging markets. But as Nietzsche (and Kelly Clarkson) said, what doesn’t kill you can make you stronger. And as 2019 begins, we see many pockets of strength—and opportunity.
As expected, the Fed hiked interest rates yesterday, but we now think there will be fewer hikes in 2019 than we previously called for. Not because the US economy is in trouble, but because the Fed is changing its approach to setting policy.
The median price of a US single-family home has risen just over 40% since the last housing-market crash. While newspaper headlines may put readers on edge, our analysis indicates a gradual slowdown, not a bursting bubble—in most regions.
The media and some market observers are bracing for a blizzard of BBB-rated bonds to get downgraded to junk as the credit cycle turns. We expect it will be closer to a flurry.
Bond investing is going digital. Find out how fixed-income managers who are integrating technology into their processes will be able to move from great ideas to executed trades faster and with better results than those who stick with the analog status quo.
Recent market gyrations have many people asking: Is it time to pivot from a growth equities allocation to a value equities allocation? But that’s the wrong question. Instead of asking which style is likely to outperform, investors should be asking why they’re performing differently.
The balanced approach to income generation for fixed income has certainly been under challenge. If we look at five-year yields—early September, 180 basis points; today they’re at about 2.8%. So, 100 basis points higher means you’re going to put price pressure on a balanced approach to generating income.
Recent volatility in equity markets has certainly increased anxieties for many investors. But we believe in being prepared and ready to exploit volatility—to position a portfolio for what will drive excess performance over the next three to five years.
As we get ready to move into 2019, the macro backdrop points to a less favorable mix of growth and inflation at a time when central bank balance sheets are starting to shrink. Even if growth is simply returning to trend, the year ahead is likely to be more challenging—with populism and China looming as key downside risks.
A rapid rise in US interest rates has put financial markets on the defensive lately. Will the Federal Reserve respond by slowing the pace of its tightening campaign? Don’t bet on it.
We think populism is here to stay and that it will be a persistent part of the investment backdrop for many years to come.
What drove down US stocks this week? The answer may be the US bond market and what the shape of the yield curve is—or isn’t—telling us about the state of the economy.
First, the bad news: high-income investors should saddle up for another bumpy ride in 2019. Now the good: with challenges come opportunities—and we see plenty on the horizon for investors who take the long view.
