Global Strategy Outlook

May 2016 Global Investment Outlook

May 2016 Global Investment Outlook

The US economy appears to be recovering from its prolonged slowdown, but the tone of many strategists remains cautious in the medium-term. Nouriel Roubini fears that "secular stagnation" may lead to a populist backlash against trade and globalization. Gavyn Davies tempers his optimism with caution over China, while Bill Gross believes that central banks are doing more harm than good.

Here is a round-up of some of the more interesting investment outlook articles and reports from the last week or so:

Savvy Investor

The Global Growth Funk (Nouriel Robini, May 2016)
The IMF and others have recently revised their forecasts for the global economy downward – again. It's unsurprising: The global economy has few bright spots, with both actual and potential output growth falling in both emerging and advanced economies.

Fading risks of global recession (Gavyn Davies, May 2016)
According to Fulcrum's latest monthly nowcasts, the risks of a worldwide recession have started to fade following their elevation earlier this year. Both the United States and China have seen major rebounds from the brink of a hard landing, and global activity has recovered to almost its long term trend growth rate (3.6%). The recovery in EMs has been particularly notable. However, both the UK and Japan seem to have lost momentum, which raises doubts about the sustainability of firm growth in the advanced economies.

Global Investment Outlook Q2 2016 (BlackRock, April 2016)
In this paper, strategists from BlackRock's Investment Institute Outlook share their key views on the global economic and financial outlook. They note that fears of a global recession have waned since the start of 2016. They believe this, as well as the slow pace of U.S. interest rate increases, stabilizing growth and the slowdown in the U.S. dollar's rise, bode well for markets in the near term.

Investment Outlook (Bill Gross, Janus Capital, May 2016)
In his latest Investment Outlook, Bill Gross of Janus Capital argues that central banks are doing more harm than good to their economies with their continual QE programs - 'helicopter money'. He also warns of the implications for investors.

Brexit: implications of the UK voting to leave the EU (Schroders)
Ahead of the UK's referendum vote on its EU membership, investors worldwide are weighing up the opportunities and risks should voters decide to leave bloc. This report by Schroders examines the Brexit risk and the possible impact on the UK economy both in the short and long term. The authors also consider the likely reaction by markets for sterling, bond and equities.

Economic and Strategy Viewpoint (Schroders, May 2016)
This economic and strategy paper by Schroders covers a range of topical issues, from emerging markets to negative interest rates to global GDP forecasts.

China's Slowing - so what? (Byron Wien, Blackstone, May 2016)
An occasional commentary on the outlook for global markets from Blackstone.

Putting Markets into Perspective Q2 2016 (PIMCO)
This paper by PIMCO is designed to provide some direction for today's complex marketplace. It presents PIMCO's latest thinking on important themes driving global economies and markets, with practical applications for investors and solutions to consider.

Oil Market Fundamentals over the Next Five Years (Deloitte, 2016)
This paper by Deloitte MarketPoint examines the future of the oil and gas industry following recent falling oil prices and deep reductions in capital expenditure. It considers the outlook for the next five years.

Global Fixed Income Asset Allocation (PineBridge, May 2016)
A monthly analysis of key global bond market sectors, assessing fundamentals, valuations and technicals from PineBridge Investments.


Leaving the EU: Implications for the UK financial services sector (PwC, 2016)
This 48-page paper by PwC analyses the potential impact on the UK financial services sector of a "Brexit" from the EU. The authors provide two alternative "Brexit" scenarios - the FTA scenario and the WTO scenario.

The Free Lunch: Decoupling Diversification and Risk (Salient Partners, 2016)
The authors of this very interesting paper discuss why considering diversification and risk independently may help investors build more efficient portfolios. They argue that asset allocators should rethink the impact of low volatility diversifiers in higher risk portfolios. Some low vol asset classes (e.g. hedge funds) may primarily have a “de-risking” impact, but not a "diversifying" impact. The paper demonstrates that, perhaps counter-intuitively, high volatility diversifiers can sometimes be very effective, and allocators should consider these strategies.

Guide to Delegated Investment Management (Willis Towers Watson, 2016)
This detailed document from Willis Towers Watson provides plan sponsors with valuable insights into delegation. As a consequence of delegation, plan sponsors have access to relevant skills that are lacking. They also can devote more time to oversight and strategy issues. The authors emphasise the importance of objectives evolving over time as the objectives of a delegate mandate evolve too.

The Rise of Factor Investing: Adoption by Institutional Investors (BlackRock)
This paper examines the increasing prominence of factors and factor investing in institutional portfolios. The paper is split into four parts: Introduction; The Factor Landscape; Capital Allocation and Investment Strategies; The Future of Factor Investing. The report is based on a survey of 200 institutional investors from around the world.

Asset Management Salaries: Survey Results (surveys by role/geography)
Our most read surveys cover compensation benchmarks for different positions within UK Front Office and Asset Management, US Asset Management, Canadian CFA Charterholders and Asian/Australian roles.

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