Market Compass
March 2019

Edited by the Macro & Market Research Team.
A team of 13 analysts based in Paris, Cologne, Trieste, Milan and Prague runs qualitative and quantitative analysis on macroeconomic and financial issues.

The team translates macro and quant views into investment ideas that feed into the investment process.

  • Risk assets have recovered in full, despite the slump in exports and industrial data. This rally still has some potential for now.
  • Global risks still abound (not least the US/Euro Area trade spat), but the near-term outlook appears rather friendly. We remain confident that a sharper global downturn will be avoided.
  • Importantly, low inflation has helped central banks turn more dovish, creating the conditions for a ‘mini-Goldilocks’.
  • We keep a pro-risk bias, with a prudent overweight in equities and an underweight in Govies. Also, we trim our short-duration bias especially in credit, where a steeper credit curve makes longer-dated Euro Investment Grade more attractive. Finally, we further reduce the cash overweight.
MARCH 2019


US President-elect Joe Biden has unveiled a $1.9 trillion stimulus package proposal. Following the recent increase in cases, China has imposed new restrictions and lockdowns in the Hebei province. Canada has implemented new restrictions and a provincewide curfew in Quebec that will last until February 8. German Chancellor Angela Merkel warned that the recent rise in Covid-19 cases could force the country to prolong the nationwide lockdown until April.
Following a monster rally in stocks last autumn, multiples are well above historical averages, but equity investors can count on lingering low yields, tighter credit spreads and increasing central banks’ balance sheets which in turn maintain low the cost of equity and the discount rate of future cash flows.
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