What to make of the US dollar’s doldrums?

Today’s weak dollar has the potential to spark higher interest rates and ignite commodities

While the dollar moved higher against global currencies in 2014 and 2015, headlines touting the dollar’s strength continued long after its price trend flattened out. Since then, the Federal Reserve adopted tighter monetary policy, leading many market prognosticators to predict a renewed rise in the US dollar. I was not among them.

In fact, it has been my contention for nearly two years that

Continue

Three reasons why we’re bullish on Brazil

Despite political turmoil, we see long-term positives for Brazilian stocks

Just as Brazil seemed to be recovering from its worst recession in history, it took another hit last May. A secret recording surfaced of President Michel Temer allegedly discussing a scheme to pay hush money to jailed former speaker of the lower house, Eduardo Cunha. Since then, President Temer was cleared in early June of campaign finance violations, but was charged in late June with corruption related to a bribery scheme. This ongoing political turmoil has delayed the approval of much-needed pension and other reforms. And yet, Brazil’s current fundamentals are much stronger than at year-end 20161, with a benign inflation outlook, strong companies and a healthy balance of payments.

For us, as bottom-up investors, all of this adds up to potential opportunity. Below, I discuss the positive signs that the Invesco International and Global Growth team sees in Brazil.

Continue

Interest rate outlook: Long-term US rates now more dependent on global monetary policy

Invesco Fixed Income shares its views of rates around the world

US: We expect solid US economic growth to continue, and we believe inflation is likely to remain low for the next several months before moving higher in 2018. This does not affect our forecast for the US Federal Reserve (Fed) to begin tapering its reinvestment program in September. However, inflation data will be critical in determining when the Fed raises the federal funds rate again. If inflation stays low, this may not occur until mid-2018. In our view, global monetary policy will continue to be the main driver of long-term US rates, with tighter European Central Bank (ECB) policy and a rising global term premium likely to push them higher by the end of this year.

Europe: Economic growth in the eurozone has

Continue

Currency outlook: Strong global growth drives central bank policy convergence

Invesco Fixed Income shares its views of currencies around the world

US dollar: Our expectation for strong global economic growth suggests that the performance of the US dollar should be mixed. Strong global growth implies that non-US growth should be accelerating. In our view, this means that foreign central bank policy is likely to converge toward that of the US Federal Reserve, creating an environment in which the US dollar underperforms currencies of countries experiencing an economic resurgence.

Euro: We believe there is

Continue

Five trends that could impact global small caps

From increased volatility to decreased analyst coverage, we highlight key areas to watch

The only constant is change — and the global market is certainly proof of that. As we assess our outlook for the rest of the year, we see several potential changes that could impact international small- and all-cap funds. Here are the five trends we anticipate having the biggest effect — and the ways the Invesco International and Global Growth team is poised to respond.

Continue

Weekly Market Review: The summer of a hundred paper cuts

Political uncertainty has drawn blood, but not enough to call in the medics just yet

Those of us who work in offices have our own kind of occupational hazards — not the least of which is the paper cut. While hardly dangerous, a paper cut can range from harmless but annoying to mildly painful. The good news is that we rarely get more than one paper cut at once. But what if we experienced a hundred or more paper cuts around the same time? While they may not be deadly, they could certainly cause some serious suffering.

Continue

How Ireland’s economy rebounded after the financial crisis

The “Celtic tiger” now leads the eurozone in growth

Prior to the global financial crisis (GFC), Ireland’s economy was a stellar performer, earning the country the moniker of “Celtic tiger.” The onset of the GFC caused a major economic contraction and a housing crash — but today, Ireland is once again the fastest-growing economy in the eurozone. In this blog, I examine the key elements that allowed Ireland to regain its footing.

Key components of the recovery 

Continue

Halftime: Mid-year global market review and outlook

Strong earnings growth prospects remain outside the US — in spite of longer-term uncertainty

In the aftermath of a tumultuous 2016, much discussion has centered around the equity outlook for 2017 and beyond. In fact, the second quarter saw continued strong performance from global markets, though in our view, the long-term earnings outlook remains murky. As we enter the second half of the year, Invesco’s International and Global Growth team assesses global equity performance to date through our EQV (earnings, quality and valuation) lens to identify the key areas to watch — along with potential growth opportunities.

Continue

Emerging from the shadows — the case for emerging markets

A closer look at catalysts

After an extended period of weakness, emerging market equities have rebounded nicely year-to-date — outperforming developed market stocks by a sizeable margin, as measured by the MSCI Emerging Markets Index and MSCI EAFE Index.1 In my view, this strong performance has been driven by better macroeconomic conditions, strong earnings growth and discounted valuations relative to developed market equities.1

Let’s take a closer look at these emerging market catalysts:

Continue

Weekly Market Review: Are emotions overriding facts?

In the US and Europe, sentiment doesn’t seem to match current realities

Global stocks moved higher last week, driven by a US stock market that continued to advance despite a plethora of negative headlines and a growing likelihood that President Donald Trump’s legislative agenda will not come to fruition in 2017. In addition, US stock market volatility, as measured by the VIX Index, remains very low. It’s almost as if US stocks have a Teflon-like coating around them, shielding them from the brunt of negative news. But why?

Continue