Ten for 2019
(As at: 29 November 2018)
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1. New rulebook for global economy
- 2. Europe has to live with political risk premia
- 3. Economic growth flattens as divergence persists
- 4. Inflationary pressures mount - slowly but steadily
- 5. Central banks: Monetary flood abates
- 6. Fixed income: Yields face moderate upward pressure
- 7. Emerging Markets: Headwinds recede in 2019
- 8. Stocks: Late-cycle bull market lacks momentum
- 9. Commodities caught between economic cycle and geopolitics
- 10. Investing within a fragile environment – activity beats volatility
1. New rulebook for global economy
- Economic growth continues, yet subdued
- Populism increases political risk
- Sino-american conflict threatens world (economic) order
2. Europe has to live with political risk premia
- Germany: Politics only little future-oriented
- Italy: Political, but no fiscal problems yet
- UK: Economic damage increases with Brexit uncertainty
3. Economic growth flattens as divergence persists
- Growth gap between US and Europe lasts in 2019
- US: Second longest economic upswing since World War II won´t come to an end
- Europe: Economic climate becomes increasingly challenging
4. Inflationary pressures mount - slowly but steadily
- Moderate inflationary pressure both in the US and in Europe
- US: Price increases slightly above the Feds` target
- EMU: Inflation rates expected to rise during 2019
5. Central banks: Monetary flood abates
- Moderate tightening to be anticipated
- US: Three rate hikes in 2019 (plus one in December 2018)
- Eurozone: ECB will adjust monetary policy in the second half of the year
6. Fixed income: Yields face moderate upward pressure
- Bunds and (initially) US-Treasuries see rising yields
- European periphery bonds burdened by political risk premiums
- Credits: Higher interest rates and mounting risk lead to spread tightening
7. Emerging Markets: Headwinds recede in 2019
China fights for balance – with an uncertain ending
- Strong dollar hampers emerging markets stocks
- Valuation of emerging markets bonds become gradually more attractive
8. Stocks: Late-cycle bull market lacks momentum
- Earnings 2019: Higher cost, but no margin widening
- Mature cycle limits performance to amount of earnings increases
- US stocks show an advantage over emerging markets
9. Commodities caught between economic cycle and geopolitics
- Oil: Markets switch to supply surplus in 2019
- Metals: Supply remains subdued – industrial metals favoured
- Gold: Decoupling from real rates
10. Investing within a fragile environment – activity beats volatility
- Upheavals in macro economics, monetary and geo politics will shape markets
- Differentiated picture should lead to more volatile markets
- Activity and selection will be key to succesful investing strategies