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Invesco Canada blog

Insights, commentary and investing expertise

Macro views

Talking tariffs: New tolls threaten to further strain U.S.-China relations


May 13, 2019
Subject | Invesco | Macro views

Last week took investors on a roller coaster ride. The climax came at the stroke of midnight on Friday, May 10, when U.S. President Donald Trump’s newest tariffs went into effect – a 25% toll on $200 billion of Chinese goods. Then later on Friday, the negotiations ended with no material progress, and there are no formal plans to resume talks. What’s more, China retaliated the morning of May 13 by announcing tariffs on U.S. goods being imported to China.

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Brexit: The consequences of economic policy uncertainty


May 6, 2019
Subject | Industry views | Institutional | Invesco | Macro views

Economic policy uncertainty has for decades been recognized by economists as having the potential to negatively impact economic growth. In 2015, economists Huseyin Gulen and Mihai Ion found that economic policy uncertainty has a strong negative correlation to business investment.1 This built on previous research from the 1980s that showed that high uncertainty gives firms an incentive to delay investment decisions, especially in situations where reversing an investment decision can be costly.2

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Looking for clues on growth


April 22, 2019
Subject | Invesco | Macro views

In the past several months, we have seen central banks make an abrupt turn toward a more dovish monetary policy stance. The initial assumption by markets was that this was a decisive turn. However, more recent communications suggest otherwise. As doubts about economic growth continue to grow, so does uncertainty about the path of policy.

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Can central banks still be effective?


April 17, 2019
Subject | Invesco | Macro views

Last week was a momentous one for central banks – the minutes from the March Federal Open Market Committee (FOMC) meeting were released, giving us insight into the Federal Reserve’s views on the global economy and rate cuts, and the European Central Bank (ECB) decided to remain on its ultra-accommodative path. We were reminded that central banks are critical for supporting growth, controlling inflation and stabilizing economies – a task that is growing increasingly difficult as these institutions become more politicized.

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What’s your risk outlook?


April 9, 2019
Subject | Invesco | Macro views

I have the good fortune of meeting with advisors across Canada and hearing directly about the issues that are top of mind for their clients and their businesses. Usually there’s a certain amount of consistency to what they tell me in terms of sentiment in the market. The big picture view of asset class trends also tends to provide a consensus on where advisors are actively making allocations and how they are positioning investor portfolios.

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Three key takeaways from four days in Europe


April 9, 2019
Subject | Invesco | Macro views

Last week I had the pleasure of traveling in Europe, meeting with colleagues and clients in several different countries. It was a whirlwind tour, but it was well worth the jet lag to get an in-person account of the various issues facing Europe today. Below, I share three key takeaways from my trip.

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Six issues to watch in April


April 2, 2019
Subject | Invesco | Macro views

The first quarter of 2019 was a wild ride for capital markets — equities and government bonds rallied as U.S. Treasury yields and German bund yields sunk. This was a clear dichotomy, indicating optimism in the stock market but pessimism about the global economy. I believe this reflected more accommodative monetary policy from the Federal Reserve and other central banks, suggesting a more supportive environment for risk assets such as equities, while weakness in some economic data suggested a slowdown in global growth, pushing yields down. In this week’s blog, I discuss six current issues that could impact capital markets in April and beyond.

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U.K. Parliament begins to reveal its Brexit preferences


March 29, 2019
Subject | Invesco | Macro views

The latest installment of the Brexit saga went into overtime again on the evening of March 27, as the House of Commons engaged in a first round of “indicative votes” on alternatives to U.K. Prime Minister Theresa May’s withdrawal deal. While the resolution remains uncertain, the contours of a way forward are finally starting to take shape based on voting preferences among the many alternatives put to an indicative vote.

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Why Canadian headline noise doesn’t faze me


March 27, 2019
Subject | Invesco | Macro views

There’s been a lot of negative news headlines about the Canadian economy lately, ranging from consumer indebtedness, poor productivity growth and subscale innovation hubs. All of this doesn’t paint a rosy picture for investors.

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A dovish Fed and an inverted yield curve spark market concerns


March 25, 2019
Subject | Invesco | Macro views

Monetary policy disruption was on full display last week: The U.S. Federal Reserve (Fed) announced a momentous change to its normalization plan, the yield curve inverted and sparked investor concerns, and a noted Fed critic was nominated to the central bank’s Board of Governors.

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The Fed delivers on the dovish side


March 22, 2019
Subject | Invesco | Macro views

The Federal Reserve (Fed) held the target range for the U.S. federal funds at 2.25%-2.50% at its meeting on Wednesday. This outcome was in line with market expectations. In addition, the Fed indicated they do not expect to hike rates again in 2019 and only expect one hike in 2020.

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Fighting the ‘algorithm wars’


March 20, 2019
Subject | Invesco | Macro views

Artificial intelligence (AI), quant funds, high-frequency trading, big data — these terms get thrown around a lot these days and can create confusion and uncertainty. (Case in point: Tesla CEO Elon Musk has said that AI is more dangerous than nuclear weapons, with Facebook CEO Mark Zuckerberg calling such statements “pretty irresponsible.”1)  Beyond such dramatic statements, it’s clear to see that quants and high-frequency traders (HFTs) account for more than half of all US equity trading. How does all of this fit into the investing world as we see it?

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Algorithm Wars

Brexit uncertainty could last for another 21 months


March 20, 2019
Subject | Institutional | Invesco | Macro views

The latest installment of the Brexit drama offers good and bad news for investors in U.K. assets and beyond: The good news is the risk of a “no deal” Brexit has receded, but the bad news is it’s still a possibility and the timeline toward resolution is now more extended. This means that persistent uncertainty is likely to continue to weigh on the U.K. and wider European economies, and may elevate the volatility of U.K. asset markets, particularly the currency.

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Politicization: A growing threat to central banks


March 18, 2019
Subject | Institutional | Invesco | Macro views

The United States has always had a difficult, complicated relationship with the concept of central banks. Early on, critics sought to prevent the establishment of a U.S. central bank, while today, politicians in the U.S. and around the world seek to use central banks as tools to further their policy aims. In my view, central bank independence is critical to their ability to counteract the economic effects of geopolitical chaos.

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Change is in the air as the Fed, BOC and ECB pivot on policy


March 14, 2019
Subject | Institutional | Invesco | Macro views

There is an old Chinese proverb that states, “When the winds of change blow, some people build walls and others build windmills.” In other words, some people embrace change while others fear it. I’ve come to the conclusion that the speed of the change has much to do with how a change is received. Just look at the past week, when we saw abrupt changes in the direction of the wind for central banks, followed by largely negative reactions.

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What trade-offs will the U.S. accept for a trade deal with China?


March 7, 2019
Subject | Institutional | Invesco | Macro views

Two key risks – trade and central bank normalization – have had an outsized impact on global stocks for more than a year (sometimes positive and sometimes negative). This past week saw developments in each of these key issues.

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Populist, nationalist movements are on the rise: What could this mean for the global economy?


March 7, 2019
Subject | Industry views | Institutional | Invesco | Macro views

An informal Invesco poll of North American institutional investors recently revealed that geopolitical risk was a top concern for 2019. And they’re not the only ones worried: European Central Bank President Mario Draghi recently noted that the risks to the downside have increased, blaming, among other things, “the persistence of uncertainties related to geopolitical factors and the threat of protectionism…” In his annual letter to investors in January 2019, Seth Klarman of Baupost warned of the threat of geopolitical disruption: “Social frictions remain a challenge for democracies around the world, and we wonder when investors might take more notice of this.”

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