Invesco Canada blog

Insights, commentary and investing expertise

Three reasons why we’re bullish on Brazil


August 17, 2017
Subject | Active management | Institutional | Invesco

Just as Brazil seemed to be recovering from its worst recession in history, it took another hit last May. A secret recording surfaced of President Michel Temer allegedly discussing a scheme to pay hush money to jailed former speaker of the lower house, Eduardo Cunha. Since then, President Temer was cleared in early June of campaign finance violations, but was charged in late June with corruption related to a bribery scheme. This ongoing political turmoil has delayed the approval of much-needed pension and other reforms. And yet, Brazil’s current fundamentals are much stronger than at year-end 20161, with a benign inflation outlook, strong companies and a healthy balance of payments.

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Market review: A sea of black swans


August 15, 2017
Subject | Institutional | Invesco | Macro views

One of the key themes that I anticipated would affect markets this year is disruption. I have maintained that disruption would likely come in different forms: geopolitical risk and monetary policy risk. (There is one additional form – disruption caused by innovation – that will be addressed more fully in a future commentary.) At the risk of sounding like a broken record, I must underscore the concerns I have articulated time and again about geopolitical risk. In many ways, these risks can be viewed as black swan events – difficult to predict, but with far-reaching potential consequences.

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Halftime: Mid-year global market outlook


August 11, 2017
Subject | Active management | Institutional | Invesco

In the aftermath of a tumultuous 2016, much discussion has centred around the equity outlook for 2017 and beyond. In fact, the second quarter saw continued strong performance from global markets, though in our view, the long-term earnings outlook remains murky. As we enter the second half of the year, Invesco’s International and Global Growth team assesses global equity performance to date through our EQV (earnings, quality and valuation) lens to identify the key areas to watch – along with potential growth opportunities.

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Market review: Between a rock and a hard place in the U.K.


August 9, 2017
Subject | Institutional | Invesco | Macro views

Last week, the Bank of England (BoE) opted to keep its key short-term bank lending rate unchanged at 0.25% by a vote of 6-2. The BoE’s Monetary Policy Committee is keeping interest rates ultra low because of concerns that the United Kingdom (U.K.) economy is too weak to accommodate higher borrowing costs. It may seem surprising that the BoE is so concerned about the economy, given that the U.K. has very low unemployment; the current rate is 4.5% – the lowest rate in years.1 That may seem doubly surprising, given that inflation has been rising and could likely be nipped in the bud through higher rates.

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Interest-rate outlook: Long-term U.S. rates now more dependent on global monetary policy

After hitting lows for the year in June, 10-year government bond yields rose to a two-year high of 1.89% in July,1 as the Bank of Canada (BoC) unsurprisingly increased its benchmark rate from 0.50% to 0.75%.2 The accompanying statement was upbeat as well, brushing off softer inflation numbers as temporary. The BoC’s optimism will probably keep the possibility of another rate hike alive at each of its upcoming meetings. We expect interest rates in Canada to rise from current levels, but we are looking for signs that rates may have topped out in the short term.

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Currency outlook: Strong global growth drives central bank policy convergence

The Canadian dollar has been in a slow decline over the last year. While the Bank of Canada increased the benchmark interest rate, as expected, by 0.25% (to 0.75%) at its July meeting, oil prices appear to have peaked for the year due to increased U.S. oil production, presenting a headwind for the currency.1 We are neutral on the Canadian dollar, and concerns about overleveraged Canadian consumers leave us looking for opportunities to short the currency.

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