Is it time for investors to pivot?
The Fed has raised rates for the second time since 2008 and is beginning a normalization of interest rates after having called time on quantitative easing. In the last six months, US 10-year bond yields have risen by over 100bps, as investors begin to look beyond QE and towards a more fiscally expansive global policy framework. Inflation expectations have surged, and Trumponomics will exacerbate the trend. Is it time for investors to pivot in their asset allocation strategy?
In the papers below, Gavyn Davies sets out the case for economic rebound and reflation. BNP Paribas asks how investors should position themselves as we move beyond the peak in QE. AXA questions the dominant belief that we remain in a low rates world. PineBridge explores the catalysts that will move markets in 2017.
Outlook 2017: Rates Are Back (AXA IM, Dec 2016)
AXA IM examines the fundamentals behind the low interest rate paradigm and challenges the still-dominant idea that low rates are here to stay.
Rebound and Reflation in the Global Economy (Gavyn Davies, Dec 2016)
Global economic activity is at its highest levels since 2011. With growth now above trend, and inflation rising in response to higher oil prices, the reflation theme is ongoing.
BNP Paribas Investment Outlook 2017: Beyond the shadow of quantitative easing
The US Federal Reserve has called time on QE and has started the process of interest rate normalization. BNP Paribas discuss how investors should navigate in the aftermath of QE, when many traditional orientation points have become invalid.
Global Market Outlook 2017: Time to Pivot - Investment Ideas for a Changing World (SSGA)
2016 has seen a number of game-changing events and it's time for investors to pivot. Populism and anti-globalization sentiment has set the stage for significant policy change in 2017 and beyond.
Catalysts for Change - PineBridge Investment Outlook for 2017 (video)
PineBridge believes that equity and bond markets are ripe for change - and the catalysts are abundant. This video describes how investors should be positioned.
2017 Global Investment Outlook (BlackRock)
This BlackRock paper presents the key themes its authors believe are poised to shape markets in the coming year. It also considers some timely actions investors should consider to position their portfolios for success.
Why Equity Investors Should Worry Less About the Fed (QMA, Nov 2016)
Some fear that the Fed could soon be the proverbial straw that breaks the back of a market currently trading at record high P/Es. This paper challenges the accepted wisdom about the link between interest rates and equity valuations.
The Pessimists Guide to 2017 (what could possibly go wrong?) Bloomberg
In 2016, Brexit and Trump shocked most of the world but not readers of last year’s Guide which warned that the unthinkable in both cases could happen. Be in the know and read the authors' thoughts for 2017.
Global Outlook 2017: Time for Plan B (Robeco)
Following a year of dramatic political shocks, 2017 is likely to see greater use of fiscal policy by governments. This global outlook focuses on more than a dozen issues.
Global Asset Allocation Views 1Q 2017 (JP Morgan)
This paper by JP Morgan Asset Management explores the asset allocation outlook for 1Q 2017. The authors discuss key economic themes and their implications on investors' strategies.
Global Fund Manager Survey: The Inflation Capitulation (BofAML, Nov 2016)
BofAML’s November Fund Manager Survey was conducted 9th-14th Nov, i.e. after the US election results were known; 177 clients with $456bn AUM participated.