Takeaways from Our Q4 Outlook

Mike shares what investors need to know as the final quarter of 2019 kicks off.

The fourth quarter of 2019 kicked off with a market selloff and more evidence that a protectionist push is hitting the U.S. industrial sector. How are our asset views faring this year to date–and what are the key themes we see shaping markets in the months ahead? We address those questions in the Q4 update to our Global investment outlook. Here’s a quick look at our answers.

Looking back

Risk assets have performed strongly year to date, and our overweight in U.S. equities has paid off. Meanwhile, emerging market (EM) and Asia-ex-Japan equities have under-performed since midyear, validating our shift to an underweight stance. See the chart below.

We have been surprised by the extent of the rally in government bonds, which have played an important diversification role in cushioning against equity selloffs. Rising geopolitical tensions loom as an ongoing risk and challenge our overall moderate pro-risk stance. Finally, Japanese equities have outperformed, contrary to our expectations, thanks to a lull in trade tensions that we see as temporary.