Invesco

Rate volatility underscores merit of a “boring bond fund”

The Federal Reserve (Fed) is almost certainly going to raise interest rates in December, but what’s less certain is what comes after that – will 2019 see three rate increases or four?

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During market drops, the Low Volatility factor has outperformed

In 2017, the S&P 500 Index did not experience any corrections greater than 5%. So far in 2018, there have been three such market drops. So which year represents the more typical investor experience? History shows us that the relative calm of 2017 was an outlier, and that losses and volatility are recurring events that investors should be prepared for.

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Despite lower GDP growth, European earnings may accelerate in 2019

For months, Europe has grappled with geopolitical uncertainty in the form of ongoing Brexit negotiations (which face a looming March 2019 deadline) and Italy’s populist coalition government. In this environment, UK companies have appeared less likely to invest – which could lead to lower European growth levels next year.

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Five issues for investors to watch

Last week, the U.S. experienced a deepening split in political leadership, which dominated headlines. And yet, that was just the tip of the iceberg in terms of events that are impacting global markets. Below, I recap five key events from last week and highlight five issues to watch moving forward, including whether there are grounds for new alliances among U.S. President Donald Trump and the Democratic House.

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U.S.-China spat underscores value of investing in quality

There was news out last Friday that U.S. President Donald Trump has directed his cabinet to start crafting a new trade agreement with China.¹ With my focus on emerging markets, this is welcome news, as the trade dispute between the world’s two largest economies has cast uncertainty over the markets.

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The U.S. midterm results are in, but what do they mean for markets?

Going into yesterday’s U.S. midterm elections, our base case scenario was that Democrats would take the House while Republicans would retain the Senate. That has come to fruition, and has had an initially supportive effect on markets, with U.S. stocks and bonds supported and the dollar weaker. This U.S. market response has in effect eased global financial conditions, supporting other currencies and financial markets in general, including emerging markets.

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Anticipating the U.S. midterm results

October has come to an end – and what a miserable month it was for stocks. The Dow Jones Industrial Average fell more than 5%, the S&P 500 Index lost 6.9% (its worst month in seven years) and the Nasdaq Composite Index dropped 9.2% (its worst month since November 2008).¹ Looking beyond the U.S., the MSCI EAFE Index gave up 8% during the month while the MSCI Emerging Markets Index lost 8.7%.¹ And beyond stocks, major bond indices, such as the Bloomberg US Aggregate Bond Index and the FTSE Russell Emerging Markets Broad Bond Index, also gave up some ground.¹ Real estate investment trusts lost 3% as represented by the MSCI REIT US Index, while commodities lost 2% as represented by the Bloomberg Commodity Index.¹ One of the few bright spots in October was gold, with spot prices rising 2.8%.¹

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Shining the EQV spotlight on China and Japan

During the third quarter, the People’s Bank of China (PBOC) remained in active easing mode and Japan’s Nikkei 225 Index reached a 27-year high. Supportive monetary policy and strong momentum can often be positive indicators for markets. However, in our analysis of recent events and likely catalysts for future direction, the Invesco International and Global Growth team continues to seek opportunities but believes both markets face obstacles that could impact future performance.

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The Rise of Robots

How the fourth industrial revolution will transform economics, politics, and more

After two centuries of industrial transformation and change, we’ve reached what many now call the Fourth Industrial Revolution. It’s marked not by the introduction of steam power or the advent of mass production but by the rise of artificial intelligence and automation that will fundamentally transform the global division of labour.

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Is it time to boost exposure to the Value factor?

Risk isn’t a bad thing – when it’s intentionally, carefully added to a portfolio in an effort to boost returns. But hidden risks are what keep investors and financial advisors up at night. Over the past year, the Invesco Global Solutions team examined hundreds of financial advisor portfolios, and we discovered that a common source of hidden risk is unintended factor exposures that could impact the ability of the portfolios to achieve the outcomes they are looking for. Fortunately, there are ways to diagnose and address this problem.

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October lives up to its frightening reputation for investors

Once again, the month of October has been living up to its frightful reputation for wreaking havoc on stock prices: 1929 and 1987 are prime examples, and we can now safely say that 2018 will also go down in history as an illustration of October’s ability to scare investors. Unfortunately, I don’t foresee this volatility easing too much over the next few weeks.

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The correction: Why I focus on quality dividends

The October sell-off in global markets has several underlying factors, but the most commonly cited reasons are the rise in U.S. 10-year Treasury yield, concerns on earnings growth and the overall level of valuations.

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Stock market sell-off: The sequel

After a pause in which stocks partially recovered from their early October drop, the stock market has moved back into sell-off mode yet again.

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Five issues rattling global markets

There was no rest for the weary last week, as geopolitical developments came fast and furious, and capital markets reacted. Below, I cover five important issues that have continued to contribute to stock market volatility –  some of which flew under the radar during the week’s flood of news –  and highlight five issues to watch this week.

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Five key takeaways from the IMF annual meeting

The International Monetary Fund (IMF) took a decidedly bearish tone during its annual meeting in Bali earlier this month – in fact, I would say it was the grimmest gathering of the IMF that I’ve ever seen. I had the opportunity to attend the talks in Indonesia, and I came home with five key takeaways. Below, I summarize those takeaways and share the viewpoint from Invesco’s Office of the Global Market Strategist.

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Tariffs: Examining the economic and capital market consequences

Trade tensions have escalated in recent months to a point we haven’t seen in many years. At times in the past year, protectionist threats and actions have sent stocks downward, but investors have been all too willing to believe the threat has passed at the first sign of an abatement in trade drama. For example, after downward pressure on stocks caused by trade worries, Chinese President Xi Jinping’s conciliatory speech at the Boao Forum in March was all investors needed to hear to send stocks upward. But the elation was short-lived, as it soon became clear that President Xi had no interest in making serious concessions.

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Will the global stock sell-off continue?

It was yet another week in which I felt like we lived 100 weeks. Of course the biggest event was the stock market sell-off. U.S. stocks led what became a global sell-off, which slowed and actually began to reverse on Friday. The key question on investors’ minds is: Is this over? Or will stocks lose more ground? Before we can gauge the likelihood of this sell-off continuing, we must understand its origins. There were two catalysts for the stock market drop – and they are the two key risks I have been warning about for more than a year: U.S. Federal Reserve (Fed) normalization and trade.

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U.S. stocks plunge in tech-fueled rout

On Wednesday, U.S. stocks fell dramatically, with the Dow Jones Industrial Average falling more than 800 points. The rout was led by technology stocks, with the NASDAQ Composite Index down 316 points, but all sectors experienced losses.¹ This was the worst one-day sell-off for U.S. stocks since February. For much of the day, bonds sold off as well but, by the end of the day, investors fled to the perceived safety of U.S. Treasuries, sending yields lower.

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Jobs, trade and the economy: What did we learn last week?

Last week was particularly busy, with key data releases giving us the latest glimpse into economic activity around the world, and government negotiations establishing the boundaries of important trading relationships. Here’s what we learned, and what we need to watch going forward.

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Europe: 5 Scenarios for Investors to Watch

The future of the euro and that of the EU are inextricably tied according to our latest white paper, I co-authored with Jacek Rostowski, a former Deputy Prime Minister and Finance Minister of Poland. The big question for us is how could today’s political landscape impact the region in the coming months and years – and what does that mean for investors?

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