Global Markets Q4 Outlook: Recession or Resilience?

by Larry Hatheway | October 3, 2019

Originally Published at GAM.com | October 3, 2019

Over the final quarter of 2019, the tug of war between economic resilience and recession risk is likely to dominate market outcomes and asset allocation decision making. The asset allocation committee outlines its views below.

Binary outcomes

Over the past three months, markets have become prone to greater volatility and frequent reversal. The underlying cause is shifting perceptions about global growth. At mid-year, concerns that weakness in trade and manufacturing would spill over to services, employment and consumption led investors to anticipate significant monetary policy easing. Bond yields plunged and equities slumped as earnings estimates were cut. Then, in early September, markets abruptly reversed as positive growth surprises lifted bond yields and equity markets. Fleetingly, cyclically sensitive sectors and value outperformed more defensive plays.

Over the remainder of the year asset allocation performance is likely to remain dominated by shifting global growth expectations. Recession or resilience: getting that call right will be the critical determinant of portfolio performance in the final months of 2019. Continue Reading

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Filed Under: Economics

About the Author

Larry Hatheway

Larry Hatheway has over 25 years’ experience as an economist and multi-asset investment professional. He is co-founder, with Alexander Friedman, of Jackson Hole Economics, a non-profit offering commentary and analysis on the global economy, matters of public policy, and capital markets. Larry is also the founder of HarborAdvisors, LLC, an investment advisory firm catering to family offices and institutional clients worldwide.

Previously, Larry worked at GAM Investments from 2015-2019 as Group Chief Economist and Global Head of Investment Solutions, where he was responsible for a team of 50 investment professionals managing over $10bn in assets. While at GAM, Larry authored numerous articles on the world economy, policy-making, and multi-asset investment strategy.

From 1992 until 2015 Larry worked at UBS Investment Bank as Chief Economist (2005-2015), Head of Global Asset Allocation (2001-2012), Global Head of Fixed Income and Currency Strategy (1998-2001), Chief Economist, Asia (1995-1998) and Senior International Economist (1992-1995). Larry is widely recognized for his appearances on Bloomberg TV, CNBC, the BBC, CNN, and other media outlets. He frequently publishes articles and opinion pieces for Bloomberg, Barron’s, and Project Syndicate, among others.

Larry holds a PhD in Economics from the University of Texas, an MA in International Studies from the Johns Hopkins University, and a BA in History and German from Whitman College. Larry is married with four grown children and resides with his wife in Redding, CT, alongside their dog, chickens, bees, and a few ‘loaner’ sheep and goats.

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