Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
You can access both of our platforms from a single Saxo account.
Equity Monthly: Red October doesn't signal a slump
Peter Garnry
Chief Investment Strategist
Summary: Last month was brutal for equities with leading indices suffering big losses. But while a gentle recovery now beckons, major risks are looming on the horizon.
The market clearly went on a hunt for Red October last month with equities down 7.3% having been down by as much as 9.5% on October 29. This makes it the worst month for global equities since May 2012. Risk parity funds also had an ugly October with AQR's risk parity fund down 4.9% as fixed income did not provide shelter for the havoc in equities; the fund is down 6% year-to-date which will end up making 2018 one of the worst asset allocation years since WWII. What can we expect from here? Is this the beginning of a major decline in global equities?
Our current view is that global equities will most likely stage a comeback in November. The macro economy is not weak enough to warrant an outright bear market. Global equities have corrected 10% from the top and Chinese equities are down 30% from the top. Weakness was expected as the global economy was weakening and now the market has caught up. With the Chinese government being firm on supporting the economy it is our expectation that further Chinese macro weakness from here will not take the market down as it is already priced into equities by now. Instead the market is more likely to begin discounting small positive news and as such we recommend being overweight China but also increase exposure a bit here to equities as we believe in small rebound. Not fully recover the losses from October but slightly positive equity markets. In Q1 the effects from the China’s stimulus should begin to work unless we see further negative impact from the US-China trade war.
The decline in global equities have taken US equity valuation down a whole half-standard deviation from around 1.0 to 0.5 making their expected return (see chart) more compelling again.
The decline in global equities have taken US equity valuation down a whole half-standard deviation from around 1.0 to 0.5 making their expected return (see chart) more compelling again.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity
John J. Hardy
Global Head of Macro Strategy
After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting... -
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy