High levels of local concentration suggest employers have market power
Out now: our take on markets and the economy and our asset class expectations
If you can, help others; if you cannot do that, at least do not harm them. - Dalai Lama Summary The Sino-US trade tension risks escalating to a new cold war, which could cost not only China and the US, but also the world economy, dearly. Collateral damage to the global system could be another round of currency war in the short term with new volatility dynamics coming from China. If the end of the last Cold War fostered global economic integration, the beginning of the next one - between China and the US - will likely produce fragmentation, with long-term consequences on even technological innovation and climate change.
Equity markets' usual year-end Santa Claus rally might get an additional boost
The primary themes impacting the yields of US Treasuries and the pricing of future levels of inflation (via breakeven inflation rates (BEIs)) have changed little in the last few months. They continue to generate a range-trading environment for US Treasury bonds and TIPS.
On credit, emerging markets and the US dollar
A look at developed and emerging equity valuations to assess which now appear attractive, at least from a stock multiples viewpoint
Small caps are trading at a discount to large caps
We remain long equities and underweight fixed income, notably in the eurozone, but we trimmed our risk exposure
Emerging market debt has been the subject of much interest over the last few years, but recent volatility has created uncertainty about the asset class. We are convinced that besides offering an attractive return/risk ratio and the potential for high returns, current valuations constitute an attractive entry point.