December 18, 2019

Outlook 2020 – Repression, Introspection, Election

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In Short

As the tide of easy monetary policy slowly goes out, global markets face another challenging year. Yet 2019 will be very different from 2018, as the US economy is set to fall off its pedestal; the Fed will pause this summer, if not before. The great regional divergence of 2018 will thus end, and with it the impressive USD rally. This should bring selective relief to Emerging Markets, assuming the world economic landing continues to be soft.
Outlook 2020 - Repression, Introspection, Election
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In this video, Vincent Chaigneau, Head of Research at Generali Insurance Asset Management, shares his view on next year’s key defining macro themes and financial outlook.

Highlights:

  • Global growth is finding its feet, but a powerful upswing is not around the corner: risks such a Hard Brexit
    (still!) and the US elections are impediments to a meaningful capex recovery.
  • 2019 was in many ways similar to 2016; but 2020 will not be a repeat of 2017. We expect equity gains to continue, but in a far more muted fashion.
  • Central banks engineered a stunning risk rally in 2019; they will be less active in 2020. But nascent efforts to make inflation targets more symmetrical will remain a risk-friendly force.
  • Equities are still cheap relative to bonds: the gap between earnings and bond yields is somewhat irresistible.
    At this level of outright valuation, however, the drawdown risk increases; timely hedging will be a focus in
    2020.a
  • Avoid ‘risk-free’ bonds, but in that space prefer Treasuries as a hedging instrument. Credit continues to offer superior risk-adjusted returns. Expect the USD pullback initiated in Q4 2019 to continue (good for EM).

Watch the Video:

MACRO OUTLOOK 2020

Find out market trends and investment perspectives by our Research team, led by Vincent Chaigneau.

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