No, we do not believe investors should add a new overweight to public energy at this time. Political machinations and virus-induced uncertainty are weighing on oil prices at present, and it seems unlikely that both of these obstacles will soon be lifted. Instead, investors should closely monitor positioning to ensure their current level of energy exposure is intentional.
Our thoughts on key macro questions, emerging opportunities, and risks in 2020.
No, we don’t think so. While euro area economic activity has weakened meaningfully, with real GDP growth falling to its lowest annual pace (1.1%) since 2013 in third quarter, strong equity returns aren’t dependent on robust economic growth. Ultimately, we continue to like the bloc as part of a risk-controlled overweight to global ex US equities funded from US equities.
Equity market downturns are chaotic environments that are rarely short-lived—the best advice is to be prepared.
Yes. The seemingly ever-expanding US-China trade war has undercut economic activity in the euro area, challenging earnings expectations and the bloc’s currency.
Although an inverted yield curve is not a sign we welcome, it also is not a clear indicator of an imminent equity market downturn. Instead of underweighting risky assets, we suggest investors take this opportunity to refresh plans to manage through the next bear market.
Although we are more cautious heading into 2019 than we were 12 months ago, we still think a roughly neutral allocation to risk assets is the right approach.
Although crude oil prices above $100 a barrel will pinch consumer pockets, investor anxiety on this topic is both premature and exaggerated.
In this report, we briefly highlight five key post-GFC developments and discuss how investors might adapt their portfolios to these changes.
We don’t think so. For those investors that can hunker down and tolerate this industry’s swings, rewards may be in their future.