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Invesco Canada blog

Insights, commentary and investing expertise

Kristina Hooper

Global Markets: What to watch for in May


May 4, 2020
Subject | Coronavirus impact | Institutional | Macro views

One month ago in this blog, I noted that April would be a critical month to gauge the global response to the COVID-19 pandemic. Across the board, it was a massive response, including significant monetary and fiscal stimulus from a variety of economies and widespread lockdowns designed to slow the rate of infection. But as we enter May, we are seeing differences in approach come to the fore – between countries, between localities, and between political parties.

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As the U.S. passes more stimulus, disagreements loom on what comes next


April 27, 2020
Subject | Active management | Coronavirus impact | Institutional | Macro views

For months, I have talked about the importance of policy in combatting the COVID 19 crisis: health policy, monetary policy, and fiscal policy. All three prongs need to be adequate and effective in order for the US economy to recovery quickly. While the Federal Reserve has bent over backwards to provide accommodation to support the US economy and markets, fiscal stimulus is still a work in progress.
 
In this week’s commentary I talk with Andy Blocker, Invesco’s Head of US Government Affairs, who breaks down where we are today in terms of fiscal policy – and what to expect next.

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Tracking China’s recovery and a dire U.S. earnings season


April 20, 2020
Subject | Active management | Commodities | Coronavirus impact | Institutional | Macro views

Last week was another momentous one for economies and markets, with particular attention being paid to the economic recovery in China, earnings season for U.S. stocks, and the Federal Reserve’s views on interest rates. Below, my colleagues from the Global Market Strategy Office and I answer some of the most pressing questions we have received from clients in recent days:

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As earnings season looms, portfolio managers look for long-term opportunity


April 16, 2020
Subject | Active management | Coronavirus impact | Institutional | Macro views

Earnings season is heating up in earnest, giving investors a clear glimpse into the economic impact of the global lockdowns designed to slow the spread of the coronavirus. While investors brace themselves for bleak business results, we are so glad to see that these lockdowns appear to be working as intended from a public health perspective – many countries show evidence of “flattening the curve” of infections and fatalities. This is leading to the inevitable conversations of how best to re-open economies – a task that will require caution so as not to overwhelm health care resources with a second wave of infections.
 
With all of this as background, our portfolio managers continue to look for ways to guard against the looming risks and to position themselves to find opportunities in the recovery – no matter what path that might take. In this blog, I highlight the perspectives of four Invesco investment experts:

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Six things for investors to watch in April


April 6, 2020
Subject | Coronavirus impact | Institutional | Macro views

In the early stages of the COVID-19 pandemic, we talked about the need for an effective, global, three-pronged approach in order to achieve a “best-case scenario” outcome: 1) an appropriate health policy response to “flatten the curve” and control the spread of the virus; 2) an adequate monetary policy response to support financial markets and the economy; and 3) an adequate fiscal policy response to help soften the economic blow to households and businesses. We saw effective approaches, in different forms, in both China and South Korea. Now we are looking to other policymakers to provide effective strategies as the novel coronavirus spreads.

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Where do portfolio managers see opportunities in today’s environment?


April 6, 2020
Subject | Active management | Coronavirus impact | Invesco Fixed Income (IFI) | Macro views

The three-pronged fight against COVID-19 and its economic impact continues. Central banks are providing monetary policy support to keep banks and markets functioning, national governments are providing fiscal policy support to consumers and businesses, and governments at all levels are taking public health policy steps to contain the spread of the virus. (Not to mention the tireless dedication of the health care workers on the front lines and the scientists searching for treatments and vaccines.)

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Where do stocks and bonds go from here?


March 30, 2020
Subject | Active management | Coronavirus impact | Macro views

In last week’s blog, members of Invesco’s Global Market Strategy (GMS) team in Hong Kong, Italy, London, Tokyo and New York shared their on-the-ground insights of the fight against coronavirus from a health care, monetary, and fiscal perspective. Today, we take a deeper dive into the potential implications of the pandemic on U.S. stocks and bonds, as well as the GMS team’s view of asset allocation considerations.

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Coronavirus impact and response: A global view


March 24, 2020
Subject | Active management | Coronavirus impact | Macro views

Every morning, my day begins by discussing the latest developments in the coronavirus fight with my team of strategists on-the-ground in Hong Kong, Italy, London, Tokyo, New York and elsewhere. Today, my weekly blog features several members of Invesco’s Global Market Strategy Office, who answer the most pressing questions they’ve been hearing from investors who are concerned about COVID-19 and its impact on the global economy.

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Could the surge in market volatility signal the end of the current market cycle?


March 10, 2020
Subject | Coronavirus impact | Macro views

Last Friday, Russia surprised markets by refusing to the production cuts the rest of OPEC+ supported – cuts that were needed to stabilize oil prices in the face of the coronavirus-related hit to global demand. Saudi Arabia responded over the weekend by announcing an actual increase in oil production. This comes on the heels of an announcement by Italy effectively shutting down much of northern Italy.

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As markets struggle, where do global economies go from here?


March 2, 2020
Subject | Coronavirus impact | Macro views

We have seen a rapid and dramatic market correction as a result of the news flow around the COVID-19 outbreak. This appears to be an overreaction, in my view – but I would not be surprised to see the sell-off continue as uncertainty remains high on key issues: ease of transmission, length of time a person can be infected and contagious without showing symptoms, mortality rates, and length of time before the infection rate stabilizes globally.

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Recent data reveal the economic impact of coronavirus


February 24, 2020
Subject | Coronavirus impact | Macro views

Last week both the S&P 500 and Nasdaq Composite indexes hit all-time highs mid-week before falling significantly at the end of the week on fears about the novel coronavirus (also known as COVID-19) impacting economic growth. Concerns about the contagion were amplified by the release of U.S. Purchasing Managers’ Index (PMI) flash data for February.1 The Composite PMI dropped to 49.6 – its first time in contraction territory since the 2013 government shutdown. Manufacturing PMI fell to 50.8 from 51.5 in January, with the coronavirus outbreak being blamed. Services PMI was especially hard hit (falling to 49.4 from 53.4) and is now technically in contraction territory.
 
As of today, Feb. 24, we are seeing a global sell-off in equities and a rush to “risk off” asset classes such as gold and U.S. Treasuries. Bond yields have dropped like a lead balloon on coronavirus fears. As of this writing, the 10-year U.S. Treasury yield is at its lowest level since 2016, and the 30-year is at its lowest level ever.2 The 10-year/3-month yield curve has inverted, and the 10-year/2-year yield curve is close to inverting. I have found that, historically, the 10-year U.S. Treasury yield has been a far better gauge of fear than the VIX – and the 10-year is telling us that there are serious concerns that this contagion will impact global growth.

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The market impact of coronavirus has begun to spread


February 18, 2020
Subject | Coronavirus impact | Macro views

The floodgates are opening. Companies are beginning to warn that the coronavirus outbreak will impact earnings, and stocks have begun to react negatively. Yesterday, Apple announced that the contagion will cause it to miss revenue forecasts for the quarter. The problems are on both the sales and production ends: Most Apple stores in China remain closed, and while Apple factories there have reopened, they are not operating at full capacity but instead are slowly ramping up production. In addition, Tesla and Alibaba have recently provided coronavirus-related earnings warnings. Alibaba has gone so far as to label the coronavirus outbreak a “black swan event.”

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Three key takeaways from the Fed’s Monetary Policy Report


February 10, 2020
Subject | Macro views

In last week’s blog, I noted that what I would be following most closely that week was the release of the Federal Reserve’s Monetary Policy Report, because it provides insight on what the Fed is thinking. On Friday, the Fed released this semi-annual report in advance of Fed Chair Jay Powell’s Humphrey-Hawkins testimony before Congress on Feb. 11 and 12. As is customary, several special topics were covered in the report. Below, we focus on three key takeaways: U.S. manufacturing, the role of monetary policy rules in times of uncertainty, and the coronavirus epidemic.

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Three issues that could keep global markets reeling


February 3, 2020
Subject | Macro views

Last week was a momentous one for markets, with coronavirus fears gripping markets and creating a risk-off environment. Stocks sold off while yields on government bonds also fell. Over the course of less than two weeks, the yield on the 10-year U.S. Treasury fell from over 1.8% to 1.51%, and the yield on the 10-year German bund dropped from -0.22% to -0.44%.1
 
This week, I see potential for continued market volatility, both to the upside and the downside. Here are three key issues I’m watching:
 

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Assessing the market impact of the Wuhan coronavirus


January 27, 2020
Subject | Coronavirus impact | Macro views

The outbreak of novel coronavirus in Wuhan, China, and in pockets around the world has garnered significant public concern, and the global financial market is on edge. We have received numerous questions about the potential impact to investors and how the economic effects of the coronavirus might compare to past outbreaks such as the spread of SARS (Severe Acute Respiratory Syndrome) in 2003. Below, we seek to answer those questions, given the best information that we have at this time.

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The U.S.-China trade deal presents a paradox for markets


January 21, 2020
Subject | Macro views

Last week, the U.S. and China signed their Phase 1 trade agreement. This trade deal is a paradox – in my view, it is both inconsequential and yet extremely important.
 
It is inconsequential for two reasons: Tariffs will remain in place on a large amount of goods traded between the U.S. and China, and the deal doesn’t tackle many of the most important trade issues between the two countries. However, it is extremely important because of what it symbolizes: This trade deal suggests that friction between the two countries has peaked and is moving lower. The psychological effect is very significant, as it means that economic policy uncertainty has fallen. And, when companies believe economic policy is more certain, they typically spend more, especially on capex.

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What could the U.S.-Iran conflict mean for investors?


January 14, 2020
Subject | Invesco | Macro views

After the U.S. killing of Qassim Suleimani on Jan. 3 and Iran’s retaliatory, non-lethal missile strike against two U.S. military facilities in Iraq on Jan. 7, the situation appears to have de-escalated. However, investors continue to worry about the potential for this conflict between the U.S. and Iran to worsen. We do not believe that a war is likely at this juncture, but it is important to understand the potential effects that such a worst-case scenario could have on the markets.

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Five issues for investors to watch in January


January 7, 2020
Subject | Invesco | Macro views

2019 was a great year for markets, and equities delivered strong returns for the year. U.S. stocks led the way at 29.07%, Chinese stocks returned 20.94%, European stocks returned 20.03%, and emerging markets delivered 15.42%.1 But the ride wasn’t always smooth, with ongoing geopolitical sagas (like Brexit) and short-term market events (like the inverted yield curve) rattling markets – and investors’ resolve – along the way.

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A holiday gift for markets: Increased economic policy certainty


December 17, 2019
Subject | Institutional | Macro views

Two developments last week suggest that we have entered a period of improved economic policy certainty. Both the UK election and the US-China Phase 1 trade deal promise to bring far more clarity for businesses as they plan for 2020 and beyond. If so, this could be a welcome gift for the economy and the stock market as we enter the holiday season.

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