Archive
How long will the cyclical upturn last?
We are at the beginning of a cyclical upturn. The crucial question is of course how long it will last. The answer depends on the nature of the shocks that will hit the system as well as its size. One of the possible shocks? A Greek exit.
Don’t neglect the emerging market headwinds
Emerging markets are performing very well in 2012. Inflows are strong, currencies are appreciating and emerging market equities are outperforming their developed market counterparts. The strong performance has further to run, but we must not forget that some serious headwinds are lying ahead.
Euro Crisis: A Scenario Analysis
In September 2011, we published a scenario analysis regarding the euro crisis. Now, more than four months later, we review our analysis. We can conclude that our economic forecast has largely materialized, while the probability of our “solution” scenario has slightly increased.
US housing is coming out of a coma
Risky asset support is building. For our asset allocation stance this has resulted in a small overweight in Global Real Estate. Since the beginning of the year we have been modestly overweight equities.
Equity uptrend has further to run
The start of the year has been positive for risky assets such as equities. Especially emerging markets and the developed Asian markets (ex Japan) stand out. Sector-wise, cyclical sectors are the clear outperformers. Are we just facing a short-lived New Year’s rally or is this the beginning of a prolonged cyclical equity uptrend?
Commodities upgraded to a small overweight
As already known, in the first week of 2012 we took more risk in our tactical asset allocation by upgrading equities (see Marketexpress of 9 January 2012) and commodities to small overweight positions. In this Marketexpress we describe in rough outline our views on commodities within a global context. The reasons why we decided to take somewhat more risk are largely determined by somewhat positive changes in the situation in the Eurozone as well as in the global cycle.
Market outlook is turning more positive
Partly due to the liquidity operations of the ECB, the euro stress abated somewhat. Measures to stimulate the (domestic) economy are however also necessary for the Eurozone to grow out of the crisis.
S&P downgrades are not surprising
The initiatives taken by EU leaders to tackle the debt crisis and the agreement reached on raising the US debt ceiling have not been able to reassure financial markets. In addition, disappointing economic data have heightened recession risks. Last Tuesday, August 2, we decided to open an underweight position in equities versus an overweight in fixed income (AAA treasuries).
Senior Investment Specialist Ad van Tiggelen about Asset Allocation in October.