JFL

April 29, 2019

Investment Outlook Q1 2019

Economic Review

  • Stock markets rebounded sharply during the first quarter of 2019 as central banks shifted to a market-friendly policy stance and corporate earnings were generally stronger.
  • Growth stocks shifted back into favour during the quarter with technology and other pro-cyclical sectors leading the way.
  • The yield curve inverted which tends to be a leading indicator for an economic slowdown. However, we are skeptical of this signal for the current business cycle due to the distortion in longer term yields caused by central bank purchases.

Investment Outlook

  • Central banks are signaling their intention to keep shortterm interest rates lower which leads us to remain optimistic on the likelihood of global growth surpassing expectations.
  • Geopolitical risks remain top of mind looking forward with China’s continued debt expansion, ongoing Brexit hearings, and trade negotiations between China and the U.S.
  • Constructing a conservative top-quality portfolio should prove to be progressively valuable during these continued uncertain global conditions.

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