Five key takeaways from the IMF annual meeting

Invesco reports from scene of the most bearish gathering in memory

Arnab DasTime to read: 5 min

The International Monetary Fund (IMF) took a decidedly bearish tone during its annual meeting in Bali earlier this month — in fact, I would say it was the grimmest gathering of the IMF that I’ve ever seen. I had the opportunity to attend the talks in Indonesia, and I came home with five key takeaways. Below, I summarize those takeaways and share the viewpoint from Invesco’s Office of the Global Market Strategist.

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Risk management and ESG strategies

Environmental, social and governance issues can present material issues for companies

Time to read: 2 min

More than ever, people want to be fully informed about what they are eating — not only the calories, but whether it’s gluten-free, pesticide-free, organic or raised with growth hormones. They even want to know if the packaging is recyclable. Why? Because they’re seeking to avoid risks to their health and to the environment. In the same way, investors today are well aware that risk can come from a variety of places — and that’s helping to fuel an interest in environmental, social and governance (ESG) investing.

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Three ways investing is like baseball

Both endeavors are driven by statistical analysis. Explore three different ways that managers can build their ‘teams.’

Time to read: 2 min  

As I write this blog, it’s mid October, and the Major League Baseball playoffs are in full swing. Perhaps more than any other sport, baseball is famous for statistical analysis, and there are seemingly endless ways to evaluate every player. Similarly, there are many ways to evaluate stocks, and different portfolio managers assemble their “teams” using a variety of methods. To understand the differences, consider the ways that coaches can choose players for a baseball team.

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Will the global stock sell-off continue?

Weekly Market Compass: Earnings may provide support as the threats of normalization and protectionism continue

Time to read: 4 min

It was yet another week in which I felt like we lived 100 weeks. Of course the biggest event was the stock market sell-off. US stocks led what became a global sell-off, which slowed and actually began to reverse on Friday. The key question on investors’ minds is: Is this over? Or will stocks lose more ground? Before we can gauge the likelihood of this sell-off continuing, we must understand its origins. There were two catalysts for the stock market drop — and they are the two key risks I have been warning about for more than a year: US Federal Reserve (Fed) normalization and trade.

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Growth and Momentum continue 2018 factor leadership

Q3 performance shows that different factors outperform in different market environments

Nick Kalivas

Time to read: 5 min

Factor returns displayed a wide dispersion in the third quarter, with a 12.2% spread between the best-performing factor index (Russell Midcap Pure Growth) and the worst-performing factor index (S&P 600 Pure Value). Year to date, the spread is a hefty 31.0%.1 What does this mean? Investors who judge the equity market based on traditional benchmarks may not realize the market opportunities that are present “underneath the hood” via factors.

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REITs: Bond proxy or barometer of economic growth?

Hint: REITs can participate in a growing economy

Posted by Paul Curbo, Portfolio Manager and Chris Faems, Associate Portfolio Manager

Time to read: 3 min

The September Federal Open Market Committee (FOMC) meeting saw the US Federal Reserve increase rates as expected. Additionally, the 10-year US Treasury yield has risen about 42 basis points (bps) off its lows in late August and is up almost 96 bps from a year ago.1 Historically, upward moves in the federal funds rate or US Treasury yields have typically led to diminished sentiment toward real estate investment trusts (REITs) and/or price pressure relative to general equities. But at Invesco Real Estate, we believe investors should remember that REITs are not bond proxies — these assets do not automatically fall in price as interest rates rise. Rising rates often reflect a growing economy, and REIT cash flows (and share prices) may participate in this growth.

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US stocks plunge in tech-fueled rout

Protectionism and Fed normalization may have created the ‘perfect storm’ for market disruption

Time to read: 4 min

On Wednesday, US stocks fell dramatically, with the Dow Jones Industrial Average falling more than 800 points. The rout was led by technology stocks, with the NASDAQ Composite Index down 316 points, but all sectors experienced losses.1 This was the worst one-day sell-off for US stocks since February. For much of the day, bonds sold off as well but, by the end of the day, investors fled to the perceived safety of US Treasuries, sending yields lower.

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Jobs, trade and the economy: What did we learn last week?

Weekly Market Compass: Identifying the trends behind key data releases and trade agreements

Time to read: 5 min

Last week was particularly busy, with key data releases giving us the latest glimpse into economic activity around the world, and government negotiations establishing the boundaries of important trading relationships. Here’s what we learned, and what we need to watch going forward.

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Currency outlook: Convergence of global economic forces may cause weakening of US dollar

Invesco Fixed Income shares its views on currencies around the world

Time to read: 2 min

US dollar: Neutral. In our view, the US dollar remains trapped between two trends. Interest rate hikes (and ongoing balance sheet reduction) by the US Federal Reserve have increased US dollar funding costs and tightened financial conditions, further fueling the US dollar rally. However, while global growth has been strong, it does appear that US economic activity has peaked. This convergence typically causes the US dollar to weaken. If the trade environment stabilizes, this may benefit other currencies versus the US dollar in the near term.

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Interest rate outlook: US core inflation may drop below 2% barring tariff-related shocks

Invesco Fixed Income shares its views on rates around the world

Rob WaldnerTime to read: 3 min

US: Neutral. With growing trade worries and above-trend growth, we expect US rates to stay range-bound. Core US inflation slowed in August, and we believe it will continue to slow for the rest of the year. Going forward, we expect softer rental and service costs to drive core consumer price inflation below 2%, excluding tariff-related price increases. Absent any major trade-driven shocks, US growth is likely to remain above-trend for the rest of the year, supported by stronger energy sector capital expenditures, increased job growth and consumption. We continue to see 2018 gross domestic product (GDP) growth reaching around 2.8%, 1% above the long-term sustainable trend. There is a risk of tighter global financial conditions due to trade-related tensions and additional tariffs in the next few months — this may cause asset price volatility that could ultimately benefit US Treasury prices.

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