Invesco Canada blog

Insights, commentary and investing expertise

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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Tech display, Discover conference

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.

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Walking sculpture, Magic Mountain, Angerpark

Global economy: Three themes to watch in 2019


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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US national debt, treasury secretary

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:

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Drone image, aerial image of intersection

Global economy: Global economy expected to grow with low inflation in 2019


Chief Economist, Invesco Ltd.
December 14, 2018

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

Key takeaways

  • 2018 has been a year of turmoil, but, 2019 promises to be much calmer, in my view.
  • I believe the Federal Reserve should be successful in positioning the US economy for several more years of expansion.
  • Monetary policy invariably dominates fiscal policy in the determination of inflation

2018 has been a year of turmoil with weakness in the bond markets and two significant sell-offs in equity markets. In between there were crises in Venezuela, Argentina and Turkey; ongoing Brexit negotiations; a strong rise in the price of oil; and disruptions created by US President Donald’s Trump’s repeated trade measures — all set against a backdrop normalising US interest rates. However, 2019 promises to be much calmer, in my view.

Continued

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Federal reserve, economy, fiscal policy