Investment team updates - Bullet points 10 July
Insights

Investment team updates – Bullet points 10 July

Multi-asset

  • Risk markets continue to rally and have recouped much of what was lost in March, denting the valuation case that – at the March lows – offered the prospect of locking in super normal returns.
  • At the same time, uncertainty is mounting – from second waves of the virus, to trade tensions, US elections and questions around how labour markets emerge once support schemes fade.
  • So, having participated in buoyant markets as we raised our appetite for risk at the end of March, we reversed that move on the last day of June – in a return to “neutral”. This does not put us in defensive mode, but rather reduces the overall volatility budget for total return multi-asset portfolios. Indeed, we remain exposed to both equity and credit risk, our preferred asset classes.
  • Policy easing continues to run at an extraordinary clip. Lower discount rates are a powerful support as economies recover. Moreover, as economies reset in early stages of recovery, higher equity multiples might be expected.
  • But, taking some risk off the table in unconstrained multi-asset funds feels prudent here 1.

US equities

Markets
  • The US market had a strong week last week, with the S&P 500 up by 4% and the Russell 2000 up by 3.9%. The Nasdaq was also up, by 4.6%, to end the week at an all-time high. Momentum/growth names outperformed value again, building on the outperformance of
    this factor over value, but value returns were still positive.
  • All sectors were in positive territory led by communication services, real estate and materials. Within communication services, internet-levered names and the FAANGs more broadly did well, while chemicals and packaging groups excelled in materials. Energy, particularly refiners and integrated energy groups, were behind the index despite crude being up and financials also fared worse, especially banks, credit cards and insurers.
  • The market managed to advance despite the concerning growth of coronavirus cases in some parts of the country. California, Texas, Florida and Arizona have all hit a new peak in cases which has led several states to pause or rewind their reopening plans. If this surge continues and becomes embedded it could throw the emergent recovery off course by dampening business activity and confidence.
  • There was more good news on the vaccine front as Pfizer and BioNTech came back with positive results in trials.

Economy

  • The Coronavirus Aid, Relief, and Economic Security (CARES) Act program is set to expire at the end of July and Donald Trump’s administration is still hopeful of reaching agreement on a new package, especially considering the negative impact on GDP if no agreement is reached with Congress.
  • The House of Representatives passed a $1.5 trillion infrastructure proposal, but it is uncertain whether it will be passed into law by the Senate. However, this does bode well for future stimulus action should the Democrats secure a clean sweep in November’s election.
  • Republicans are reluctant to renew the unemployment benefit programme beyond July, and so there could be implications down the line for employment.
  • Non-farm payrolls in June surprised to the upside for the second month running, as 4.8 million jobs were added to the economy, while the readings for the previous two months were revised upward. However, this data was collected just before the recent uptick in cases so does not reflect the potential impact this will have on the labour market. Initial jobless claims continued to fall, though continuing claims increased slightly and remain far above the pre-crisis levels.
  • The ISM Manufacturing reading of 52.6 for June showed expansion in the sector again.
  • Indications from the Fed suggest that there is not much support on the Federal Open Market Committee for a policy of yield curve control.

Election

  • Joe Biden continues to pull ahead from Trump in the polls, especially in key battleground states like Florida. Although we have previously commented that a Biden presidency (and Democrat sweep of both houses) might lead to higher tax rates and regulation, Biden is considerably more pro-business than his previous challengers for the Democrat nomination such as Bernie Sanders and Elizabeth Warren. It is also looking increasingly likely that a Biden presidency and control of both houses could lead to economic stimulation in the form of a substantial infrastructure package.

European equities

  • The Covid-19 first wave appears to be largely over in Europe, so the medical risks lie around second saves or isolated flare-ups, and high infection rates and mortalities in other territories, for example the US.
  • The recovery in value stocks has run hard and may now be petering out. Economic activity is set to recover, but expenditure will remain below “normal” (ie pre-virus) levels.
  • This means our focus on robust and sustainable business models is crucial. Sadly, high unemployment and the lack of a 100% recovery in economic activity places many others at risk.
  • The market recovery has been strong and valuations are more stretched than before. This is only sustainable in the light of stimulatory fiscal and monetary policy, which will again tend to favour our style.

Fixed income

  • The Nasdaq hit an all-time high on Thursday 9 July, but the S&P 500 had a more mixed week, ending down -0.6% (S&P500).
  • Credit spreads were tighter on 7 July: Global IG was -6% month-to-date, Euro high yield was -3%, and US HY -8%. Core yields were lower, with the US 10-year at 0.58%.
  • In the UK Boots and John Lewis are poised to slash staff numbers, with a loss of 5,300 in all. Chancellor Rishi Sunak, in his summer statement, put forward around £30 billion of stimulus, announced a cut in VAT for leisure/hospitality sectors, and a stamp duty holiday for homes up to £500,000.
  • Gold closed above $1,800 per ounce on Thursday 9 July – up nearly 20% this year – as Central Banks print more and more money.
  • Spanish bank BBVA launched an AT1 (Contingent Capital) green bond – one of the first of its kind.
  • German Industrial production for May was up 7.8% month-on-month – lower than expected.
  • The ISM Non-Manufacturing index for June was at 57.1, higher than the expected 50.2.
  • Euro area retail sales were up 17.8% month-on-month in May, but down 5.1% year-onyear.
10 Juli 2020
Cti logo
Investment Team Updates
Share article
Share on linkedin
Share on email
Hauptthemen
Verwandte Themen
Listen on Stitcher badge
Share article
Share on linkedin
Share on email
Hauptthemen
Verwandte Themen

PDF

Investment team updates – Bullet points 10 July

Note: all data as at 09 July 2020, unless otherwise specified. Source: Bloomberg

Wichtige informationen

Das hier zugrundeliegende Research und die Analysen sind von Columbia Threadneedle Investments für die eigenen Investmentaktivitäten erstellt worden. Aufgrund dieser sind möglicherweise bereits Entscheidungen noch vor dieser Publikation getroffen worden. Die Veröffentlichung zum jetzigen Zeitpunkt geschieht zufällig. Aus externen Quellen bezogene Informationen werden zwar als glaubwürdig angesehen, für ihren Wahrheitsgehalt und ihre Vollständigkeit kann jedoch keine Garantie übernommen werden. Alle enthaltenen Meinungsäußerungen entsprechen dem Stand zum Zeitpunkt der Veröffentlichung, können jedoch ohne Benachrichtigung geändert werden.

Verwandte Beiträge

21 Mai 2024

Water in crisis – searching for solutions

With too much, too little or too toxic water the world is facing a water crisis. We explore key issues and challenges before highlighting some of the companies promoting better water management.
Read time - 3 min
16 Mai 2024

Paul Doyle

Head of Europe ex-UK Equities

Positives for Europe, but the Middle East could be a headache

Inflation is a stubborn problem in the US due to labour shortages, but this is much less of a factor in Europe where activity is dull but likely to recover as the consumer is well supported.
Read time - 1 min
17 April 2024

In search of sustainability – following Highway 101

Travelling down the US west coast we met 25 companies in five days. Learn more about the tech and healthcare businesses shaping our future.
Read time - 3 min
21 Juni 2024

James Coke

Fund Manager & Co-head of Institutional UK Real Estate

Emma Gullifer

Assistant Fund Manager

Green to gold: realising opportunities from the carbon transition

We explore the interventions required to monetise green energy, and how investors might benefit from the carbon transition.
Read time - 2 min
20 Juni 2024

Gary Smith

Client Portfolio Manager, Fixed Income

What do geopolitical risks mean for central bank FX reserves managers?

Two major industry surveys show that adjusting for geopolitical challenges will impact the way foreign exchange reserves are managed
Read time - 8 min
19 Juni 2024

Roman Gaiser

Head of High Yield, EMEA

David Backhouse

Portfolio Manager, High Yield

Hochzinsanleihen machen ihrem Namen wieder alle Ehre

In der Welt der Kapitalanlagen, in der sich Trends schnell ändern können und die Märkte einem ständigen Wandel unterworfen sind, lag der Reiz von festverzinslichen Wertpapieren darin, dass sie – wie ihr Name schon sagt – stabile und zuverlässige Renditen bieten.
Lesezeit - 5 min
true
true

Wichtige informationen

Das hier zugrundeliegende Research und die Analysen sind von Columbia Threadneedle Investments für die eigenen Investmentaktivitäten erstellt worden. Aufgrund dieser sind möglicherweise bereits Entscheidungen noch vor dieser Publikation getroffen worden. Die Veröffentlichung zum jetzigen Zeitpunkt geschieht zufällig. Aus externen Quellen bezogene Informationen werden zwar als glaubwürdig angesehen, für ihren Wahrheitsgehalt und ihre Vollständigkeit kann jedoch keine Garantie übernommen werden. Alle enthaltenen Meinungsäußerungen entsprechen dem Stand zum Zeitpunkt der Veröffentlichung, können jedoch ohne Benachrichtigung geändert werden.

Das könnte Ihnen auch gefallen

Investmentansatz

Teamwork bildet eine wichtige Grundlage unseres Anlageprozesses, der so strukturiert ist, dass er die Ausarbeitung, Bewertung und Umsetzung fundierter und vielversprechender Anlageideen für unsere Portfolios erleichtert.

Fonds

Columbia Threadneedle Investments bietet eine umfangreiche Palette von Investmentfonds an, die eine Vielzahl von Anlagezielen abdeckt.

Anlagekapazitäten

Wir bieten eine breite Palette aktiv verwalteter Anlagestrategien und -lösungen, die globale, regionale und lokale Märkte und Anlageklassen abdecken.

Bitte bestätigen Sie einige Angaben zu Ihrer Person, um Ihr Präferenzzentrum zu besuchen

*Pflichtfelder

Etwas ist schief gelaufen. Bitte versuche es erneut

Vielen Dank. Sie können jetzt Ihr Präferenzzentrum besuchen, um auszuwählen, welche Einblicke Sie per E-Mail erhalten möchten.

Um zu sehen und zu aktualisieren, welche Erkenntnisse Sie von uns per E-Mail erhalten, besuchen Sie bitte Ihr Preference Center.