Despite the weakening in global leading economic indicators, our framework still points toward an expansionary regime. Find out why from Alessio De Longis in this month’s tactical asset allocation update.
Comments Off on Tactical asset allocation update: September 2021
The global economy remains in expansion, but a near-term peak in the cycle is increasingly likely, as evidenced by some shifting dynamics in the relative performance between sectors, regions, and factors.
Comments Off on Tactical asset allocation update: August 2021
Alessio de Longis weighs in on the pause in the cyclicals/reflation theme and recent monetary policy developments following the U.S. Federal Reserve’s latest meeting.
Comments Off on Tactical asset allocation: July 2021
The global expansion advances further, with strong momentum in Europe and emerging markets. We are not overly concerned about rising inflation at this stage, as long as growth continues to improve.
We are overweight equities and risky credit at the expense of investment grade and government bonds. We continue to favour equity markets outside the U.S., and cyclical styles/factors such as value, small-caps, and mid-caps.
Comments Off on Tactical asset allocation: June 2021
We expect the global economy to remain in an expansionary regime and see inflation developments as consistent with historical cyclical patterns. While we expect inflation to stabilize towards the end of 2021, we monitor its evolution across categories, with particular attention to wages and inflation expectations.
Comments Off on Tactical asset allocation: May 2021
We expect the global economy to be in an expansionary regime, with growth above its long-term trend and continuing to improve. Growth is accelerating across the developed world, with the eurozone and the UK seeing meaningful momentum driven by a rebound in the inventory cycle. Emerging Asia is accelerating again, driven by China’s real estate market and a pickup in trade activity across the region. In this month’s update, I explain why this expansionary regime is favourable to equity and credit premia, cyclical factors, and risk assets more broadly.
Comments Off on Tactical asset allocation: April 2021
Market sentiment still looks to be improving despite the recent spike in volatility and sell-off in global bond yields.
Comments Off on Tactical asset allocation update: March 2021
Macro update
Comments Off on Tactical asset allocation update: February 2021
Global recovery begins to mature, leading to expansion
Comments Off on Tactical asset allocation — January 2021 recap
Global recovery is likely to continue, boosted by news of vaccine breakthroughs
Comments Off on Tactical asset allocation — December 2020 recap
Macro update
Comments Off on Tactical Asset Allocation – September 2020
Our macro regime framework continues to indicate the global economy is likely moving into a recovery regime, confirming our expectation of an inflection in the business cycle. By and large, recent global economic data releases have shown signs of stabilization as most economies have begun the reopening process. Over the past two months, indicators from consumer confidence to retail sales, business surveys and industrial orders suggest modest improvements off the bottom readings registered in April when the most stringent lockdown measures were in effect. The improvement in economic data is most apparent in Asia, particularly in China, where evidence of an economic recovery is emerging across several parts of the economy, such as housing, industrial orders and production, money and credit growth. Emerging markets outside of Asia are still lagging, reflecting the most recent contagion waves in Latin America and Russia (Figure 1).
Comments Off on Tactical Asset Allocation – July 2020
I recently presented a webinar detailing the three scenarios that the Invesco Investment Solutions team believes could unfold over the coming 12 to 15 months. We created three brief videos that outline our Base, Bear and Bull case scenarios that I discussed. The webinar included a Q&A session, but we were not able to get to all of the questions within our allotted time. I would like to answer some of them here.
Comments Off on Answering your questions on inflation, equity allocation and gold
Our macro regime framework continues to signal that the global economy and all its major regions and countries are in a contraction regime. As widely expected, the economic data are beginning to reflect the disruption caused by quarantines and lockdowns, resulting in a significant deterioration in our leading economic indicators, which we expect to continue for some time. While global market sentiment has stabilized over the past month, it remains in a downward trend, suggesting markets are still expecting downward revisions to global growth expectations. As previously discussed, we believe this macro environment warrants a defensive portfolio posture. We have not made major changes to our asset allocation and continue to favour an overweight exposure in investment grade credit and defensive equity factors.
Comments Off on Tactical Asset Allocation Views – May 2020
The COVID-19 global outbreak that started in early January represents an exogenous shock to the global growth cycle, at a time when the world economy was on the cusp of a new synchronized cyclical recovery. Driven by this shock, our macro framework moved into a global contraction regime in February (i.e., global growth expected to be below trend and decelerate).
This regime remains in place today and is broad-based across regions (Exhibit 1). Furthermore, given the increased severity of the lockdown and quarantine measures undertaken by governments around the world, it is highly likely that most, if not all, countries and regions will experience a significant recession in the first half of 2020. Therefore, we expect the economic data to deteriorate meaningfully over the next few months.
At this stage it is difficult to determine how long this macro environment will persist. Historically, contraction regimes in our framework have lasted on average six months with wide dispersions, ranging between two and 15 months across all episodes since the 1970s. We will continue to follow the data and the framework as it runs its course, but it is nonetheless valuable to compare the current downturn to recent episodes of financial turmoil, despite meaningful differences in the source of the shock and market imbalances.
