Invesco Canada blog

Insights, commentary and investing expertise


Chief Global Market Strategist | Global Market Strategist, EMEA
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco

Key takeaways

  • We believe economic growth divergence is likely to continue to some extent.
  • Geopolitical disruption is leading to structural fragmentation.
  • The debt problem is widespread and is becoming more burdensome as rates rise.

As we look out to 2019, we believe there are three key themes that will persist into the new year.

Continued

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Fixed income: Gauging the ripple effects of softening economic growth


Chief Strategist and Head of Multi-Sector, Invesco Fixed Income
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • In the US, we believe peak levels of growth are behind us and expect to see slowing in the second half of 2019.
  • Outside the US, there are also signs of softening growth.
  • Inflation is likely to increase somewhat, but we do not believe that wage inflation will be significantly passed through to consumer prices in 2019.

Global macro

In the US, we believe peak levels of growth are behind us, although we expect annual growth of around 2.75% to persist through the first half of 2019 before slowing.  Fiscal stimulus is still having a positive effect on growth, but will likely wane in the second half of 2019.  In addition, the positive financial tailwinds that have been driving the economy may turn more neutral as monetary policy continues to tighten.  Therefore, while consumer spending will likely be additive to growth in the first half, as the boost from tax cuts winds down, the question is how much will the consumer want to spend thereafter? Consumption has grown at an unsustainably high level, in our view, over the last several quarters, driven by stronger consumer confidence and tax cuts. A meaningful slowdown in consumption could have negative implications for broader growth.  These effects mean that risks to economic growth are higher in late 2019 than they have been in previous points in the cycle.

Continued

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Global markets, financial district

International growth equities: A supportive outlook for international earnings


CIO, Invesco International and Global Growth, Invesco Ltd.
December 14, 2018

Subject | 2019 Investment Outlook Series | Institutional | Invesco | Macro views

Key takeaways

  • Despite the soft patch in certain macro indicators, there is a broad expectation that most major regions may deliver solid earnings growth in 2019.
  • We believe equity valuations remain vulnerable to higher bond yields and discount rates.
  • Trade and geopolitical tensions are the primary threats to the growth outlook.

As 2018 draws to a close, strong US corporate cash flow has been well-supported by tax cuts and increasing fiscal spending. This may continue to underpin reasonably healthy capital expenditures and support economic growth and earnings delivery in the US — but the big question is, will growth pick up around the world?

Continued

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emerging markets, economy

U.S. growth equities: Change is the fuel for growth


Senior Portfolio Manager and CIO, Invesco U.S. Growth Investment Management Unit
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • If historical precedent holds up, there is still room to be positive on equities as we move into 2019 and on to early 2020.
  • The key is to identify companies that can gain market share from technology-enabled advantages in their business model or disruptive shifts in consumer behavior.
  • We highlight several areas where technology is enabling disruption and creating opportunities.

As we look forward into 2019, we believe there is continued potential for positive US equity returns, but slowing economic growth may mean more frequent downhills — and more investors losing their way — than during the market’s climb of recent years.  Observing the weight of the evidence, we have moved into a late-cycle environment.  In our view, the path forward will not rely on choosing growth versus value, or small-cap versus large-cap. We believe it will rely on identifying “share-takers” (companies that can gain market share from technology-enabled advantages in their business model and in consumer behavior) and avoiding “share-losers” (companies that have simply been buoyed in recent years by the expanding economic environment).

Continued

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Exchange-traded funds: Strategies for mitigating the new risks of the new year


Managing Director, Global Head of Invesco ETFs
December 14, 2018

Subject | 2019 Investment Outlook Series | ETFs | Industry views | Institutional | Invesco | Macro views

Key Takeaways

  • We see new risks on the horizon for both equity and fixed income investors, but there are various exchange-traded fund strategies that we believe can help.
  • We expect that a loss of profit momentum in 2019 could lead to increased volatility and correlations, and we believe that the Low Volatility and Quality factors may perform relatively well in such an environment.
  • With the overall climate still tilting in the direction of higher rates in 2019, one way to potentially manage that risk is to build bond ladders using defined-maturity bond funds.

In the new year, we see new risks on the horizon for both equity and fixed income investors. Equity markets are anticipating a loss of momentum for corporate profit growth. And, for the first time in 12 years, fixed income investors are forced to wrestle with the challenge of navigating a multi-year upward trend in interest rates at both the short and long end of the bond universe. There are various exchange-traded fund strategies that we believe can help with both challenges.

Continued

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Solutions: Heading into an uncertain 2019, diversification must be top-of-mind


CIO and Head of Global Advisory Solutions
December 14, 2018

Subject | 2019 Investment Outlook Series | ETFs | Institutional | Invesco | Macro views

Key takeaways

  • The road ahead is expected to be challenging due to a variety of factors: rising global interest rates, increased volatility, diverging global monetary policies, and heightened geopolitical tensions around trade and tariffs.
  • Our forecasts for returns are tepid across the major asset classes.
  • There remain pockets of opportunities within asset classes.

Heading into 2019, the market’s resiliency is likely to be tested by evolving geopolitical tensions and questions regarding the ability of a late stage economy to grow. Volatility is expected to remain elevated as the markets seek additional support for increasing asset prices beyond continued earnings growth and the perceived positive impact of tax cuts. However, the road ahead will likely be more challenging to navigate. While the economy, as measured by gross domestic product, continues to expand, and US equities are experiencing their second largest expansion in recent history, there are numerous challenges for investors to navigate going forward, including:

Continued

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