Dear colleagues,
 

Please find below the latest edition of our Investment Strategy · Private Clients as of Q1 2020.

Key highlights:

• Our base case for the new year assumes only a laborious recovery from 2019’s depressed levels of activity – that is, unless US and Chinese negotiators were to reach a truly convincing and durable trade deal.

• In the US, solid consumption should keep the spectre of recession away, but not prevent growth from continuing to trend down towards potential.

• External factors should allow for some upturn in Europe, but the process will likely be gradual – in the absence of a clear catalyst.

• With an orderly Brexit now in the cards, UK growth should also finally pick-up in 2020 – a more expansionary fiscal stance providing added support.

• In Japan, the fall-out from the consumption tax hike has been worse than anticipated, suggesting forthcoming aggressive and meaningful fiscal stimulus, with the Bank of Japan in a supporting role.

• Lower rates across much of the emerging world helped partially offset the trade drag in 2019 – with the full impact of this monetary easing still to materialise.

• Valuations now being less attractive, carry should be the core strategy in multi-asset portfolios – and nimbleness will be key. Looking beyond traditional sources of income, our preference goes to EM hard currency debt, global high yield, real estate and infrastructure.

• Favourable dollar winds are fading as we move towards the new year, suggesting that its overvaluation is set to recede.

Best regards,

Your Investment Strategy Team

The French, German, Spanish and Italian versions will be available soon.