a correction, not a bear market (yet)

It is easy to get pessimistic considering the political and policy headwinds behind the nasty market correction in October. The Fed, trade war and Italy/EU standoff will keep volatility high. Fed normalization was always going to shock both volatility and the bond-stock correlation. We see the recent sell-off as yet another, if more severe, warning that there aren’t many places to hide at this stage of the cycle. But it is a correction, not the start of a bear market. Global growth isn’t crashing.
  • Market Perspective

Highlights:

  • It is easy to get pessimistic considering the political and policy headwinds behind the nasty market correction in October. The Fed, trade war and Italy/EU standoff will keep volatility high.
  • Fed normalization was always going to shock both volatility and the bond-stock correlation. We see the recent sell-off as yet another, if more severe, warning that there aren’t many places to hide at this stage of the cycle. But it is a correction, not the start of a bear market. Global growth isn’t crashing.
  • We remain positioned for a further rise in yields (more so in South Europe), still prefer cash and favor a moderate overexposure in ‘value’ equities.

Download the full publication below

A CORRECTION, NOT A BEAR MARKET (YET)
DOWNLOAD
PDF
MORE INSIGHTS

RELATED INSIGHTS

READ NOW
COVID-19 FACTS & FIGURES
According to the IMF’s Managing Director, strong international cooperation on coronavirus vaccine could speed up the world economic recovery and add $9 trillion to global income by 2025. A WHO trial found that Remdesivir, Hydroxychloroquine, Lopinavir and Interferon have little or no effect on hospitalized Covid-19 patients. Gilead Sciences has questioned the findings of the WHO study saying data appeared inconsistent.
READ NOW
INCORPORATING QUANT SIGNALS INTO EU EQUITY SECTOR/STYLE STRATEGY: MAINTAIN A TILT TO CYCLICALS AND VALUE
We present an update of our proprietary equity valuation tool, based on quant models. It provides indications of over- or undervaluation for different sectors and styles of European equities, which is further enriched by our qualitative analysis. Currently, among European equity sectors, financials, energy, telecoms, and autos look undervalued while Pharma, utilities and software appear overvalued.
READ NOW
CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
China's economic recovery continued in Q3 2020, although a bit softer than expected. Real GDP growth rose to 4.9% yoy, slightly below the Reuters consensus expectation of 5.2% yoy, but still a substantial upturn from the 3.2% yoy in Q2. On a quarterly base, growth dynamics softened to 2.7% qoq, after 11.7% qoq and -10% qoq in the two previous quarters.
MORE INSIGHTS