BNP Paribas: Managing an atypical late cycle

Marktausblick

2018 turned out to be a very different year to what most market participants had expected. In 2019 investors face robust, but weaker global growth, with the recovery in the US more resilient than in other major economies.

04.12.2018 | 09:52 Uhr

Summary

Macroeconomic views

  • Global economy likely to face more challenging environment in 2019
  • Growth expected to moderate in most regions; balance of risks shifted to the downside
  • Contained slowdown in growth should still cause US to be positive relative to major economies: asynchronous growth likely to remain

Risks

  • Unlike previous late cycles, this one will be marked by quantitative tightening, possibly exacerbated by the risk of overheating in US
  • Other unusual challenges likely to be geopolitical - escalating Sino-US trade tensions could be disruptive; EU/Italy and EU/UK tensions also worth watching

Asset allocation

  • More volatile macroeconomic and market landscape likely to mean returns are more dispersed and lower in risk-adjusted terms than in immediate post-crisis years
  • Strategically neutral equities given economic and political backdrop and associated risks; remain underweight fixed income
  • Ready to add/reduce risk tactically depending on evolution of macro/political risks


Read the full Report: Managing an atypical late cycle

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