CIBC Asset Management Perspectives – GLOBAL BRIGHT SPOTS EMERGE
The current global landscape reveals economies growing "at potential"-but slowing-no strong inflation pressure and gradual policy normalization from central banks. In this setting, we see more opportunities in specific economic regions than between broad asset classes.
In Europe, the economy is showing signs of improvement, and some political uncertainties have been reduced with the large majority win of new French President Macron. Earnings are quickly accelerating and have room to keep growing.
Emerging markets offer the best long-term value in the equity universe. In the past year, we've seen a strong rebound in earnings in Asia (ex. China), Eastern Europe and Latin America.
- Fixed Income vs. Equity: We see more opportunities in the relative movement between economic regions than between broad asset classes and are maintaining our neutral stance between equity and fixed income.
- Equity: Europe offers good potential for catch-up growth at a reasonable price, while emerging markets offer the best long-term value in the equity universe.
- Fixed Income: Bond yields in the United States and Canada are expected to head higher, but the rise should be limited in the context of intensifying global disinflation.
- Currencies: Whether Canadian monetary authorities actually hike rates once or twice before year end is of little relevance for the Canadian dollar which, to some extent, has already priced in such policy actions.
Read Perspectives Report
Perspectives Executive Summary
Perspectives Video Commentary with Luc de la Durantaye
Podcast with Luc de la Durantaye: "Where to Look as Canada's Rebound Loses Steam"