Trade agreements and tax reform could impact corporate earnings
As of today, we have more questions than answers about what to expect from the new Donald Trump administration. Certainly, it appears the US president has a pro-business and anti-regulation outlook, but how exactly will this translate into policy, and how will corporations and trading partners react? That remains to be seen.
Three questions to watch
Less regulation would be positive for economic growth and investment, in the view of the Invesco International and Global Growth team. For example, tax reform — both on a personal and business level — could lead to increased discretionary cash flow and demand for domestic investments, which from a longer-term perspective could be positive for capital spending in the United States. Already, small-business confidence hit a 12-year high and chief executive officer confidence hit a 10-year high after the election.1
There are several questions, however, that bear watching:Continue
Trump administration policies could potentially rattle economies of both countries
Absent the major reform investors have been hoping for, Japan’s economy remains largely stagnant, with the yen weakening over the last quarter of 2016. By contrast, China, along with the rest of Asia, seems poised for another year of relatively stable growth. The policies of US President Donald Trump, however, could potentially spur volatility in both economies. Let’s take a closer look.Continue
Except for trade concerns, emerging market economies are generally on a positive trajectory
Uncertainty about US trade policy changes that could potentially harm emerging market economies dragged them down 4% during the fourth quarter of 2016, underperforming developed markets by 2%.1 Yet emerging market economies generally showed positive signs, with exports beginning to recover, commodity prices rebounding, and inflation remaining benign.
Here’s a quick look at how individual countries fared:Continue
Despite improved growth, political uncertainty may give investors a bumpy ride in 2017
A brimming political calendar will make 2017 an eventful year for Europe. While a bumpy ride seems all but certain, it could mean increased opportunity for investors, given the heavy political slate and investor skepticism.
Brexit and beyond
Brexit, of course, is on the world’s radar. On the heels of the UK’s 2016 referendum, Prime Minister Theresa May has pledged to trigger Article 50 of the Lisbon Treaty by March. That would begin the two-year window for the UK to extricate itself from the European Union (EU). Even with the exit details not yet worked out, the significant reaction to the voteContinue
Earnings, quality and valuation favor international equities, but three wild cards could change the landscape
A series of exceptional events led to wide swings in global equity performance from the first half to the second half of 2016. Looking into 2017, the Invesco International and Global Growth team is generally more constructive on non-US stocks (versus US stocks) from an earnings, quality and valuation (EQV) perspective, although we are keeping our eyes on three potential wild cards that could affect the outlook.Continue
Post-election excitement is rising, but valuations continue to signal opportunity
Being a deep value investor can be a lonely endeavor. We crunch the numbers to find unloved companies that we believe have bright futures ahead — years ahead, in many cases. But if you wait long enough, market sentiment can shift and your previously unloved holdings may suddenly appear on everyone’s radar screen. That’s exactly what the deep value Invesco Comstock Fund is experiencing right now. But it’s not just two or three names that have recently gained investors’ attention; more than half of the portfolio has been pushed into the spotlight following the election of President Donald Trump.