WHITE WATERS OF THE LATE CYCLE

We see mounting evidence of overextension of credit. Outstanding debt is increasing, while quality is decreasing. Covenants are deteriorating and speculative use of debt is becoming more evident. Meanwhile, we expect the continuing positive macroeconomic backdrop, pro-business policies and levels of business optimism to continue to assist the equity market in the near term. When these contrasting equity and bond market currents meet, there is scope for white-water turbulence. Navigating such an environment will require investors to be alert, prepared and tenacious. Investors should examine and waterproof their fixed income portfolios. The return of inflation, thought to be long banished, is an additional threat that investors cannot afford to ignore.

WINDS OF CHANGE IN MARKET PARTICIPATION

After the global financial crisis, central banks stepped in for traditional banks as the primary providers of liquidity. As they now try to rein in their market involvement, it is far from clear what the implications for liquidity will be — investors should be on alert for signs of stress. The increased involvement of institutional investors in private markets affects both public and private investors, and a rise in the number of investment strategies that sit somewhere between traditional active management and traditional passive management is likely to benefit many investors not suited to either extreme.

TECTONIC FRICTIONS IN THE GLOBAL WORLD ORDER

Our 2018 theme of political fragmentation continues to be relevant in 2019 (and beyond). It is now considered a credible possibility that the pace of globalization could slow, pause or even go into reverse. Perhaps the most obvious example of the influence of politics on international trade is the state of trade relations between the United States and China. China’s growth and, perhaps more important, its efforts at opening up capital markets raise some practical questions for investors about how to manage their exposure to the world’s second largest economy. Although more turbulence in global politics is likely to continue to weigh on markets, it may present a more favorable investment environment for certain types of opportunistic strategies.

SUSTAINABILITY GATHERING MOMENTUM

Governments, regulators and beneficiaries are increasingly expecting those with responsibility for allocating capital to take a broader perspective of risk and return — although expectations strongly vary among different regions. Can the investment industry continue to invest without serious consideration of the way the world is changing demographically, socially, environmentally, technologically and politically? We recognize that the incorporation of sustainability considerations into portfolios involves the need for a longer timeframe than what is typically used for investment decision-making, but investors who do take a longer-term view may uncover opportunities that are not currently priced in.

We foresee a world where asset owners and investment managers incorporate sustainability as a standard action, moving on from optical responses to a place where sustainability is integral to idea generation and risk management. 

 

Download the full Weekly Market Commentary

WealthShield is a division of Emerald Investment Partners, an SEC Registered Investment Advisor. Advisory services are only offered to clients or prospective clients where WealthShield and it’s representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by WealthShield unless a client service agreement is in place. Before investing, consider your investment objectives and WealthShield’s charges and expenses.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends recovery beyond 1.1050 on Saudi output headlines

News indicating that Saudi Arabia’s oil output would return to normal quicker than expected, lifted the market’s mood and weighed on the greenback. EUR/USD underpinned by improved Business Sentiment according to the German ZEW Survey.

EUR/USD News

GBP/USD rallies past 1.2500, reaches fresh multi-week highs

The GBP/USD pair is trading above the 1.2500 figure, getting a boost from easing demand for the greenback following relief news related to the crude oil market after the weekend attack to Saudi facilities.

GBP/USD News

USD/JPY drops back to recent range after hitting fresh 6-week highs

The USD/JPY pair spiked to 108.35, reaching the highest intraday level since August 1st and then pulled back to the 108.15/20 area.

USD/JPY News

Saudi Arabia's oil output to be fully back online in next 2-3 weeks

Citing two sources briefed on the Saudi oil operations, Reuters reported that Saudi Arabia's oil output would return to normal levels quicker than initially thought.

Read more

Gold struggles to find direction, trades in tight range near critical $1,500 handle

The XAU/USD pair struggling to make a decisive move on Tuesday and continues to trade in a relatively tight range around the $1,500 handle.

Gold News

Forex Majors

Cryptocurrencies

Signatures