Overview
Global growth has slowed in the last three months, following a strong start to the year. Corporate earnings have peaked, but despite this, there is cautious optimism for improved growth in the US and other economies for the rest of 2019.
There are risks to monitor, chief among which are the threat of geopolitics and escalating trade tensions. Coupled with this, disruption continues to dominate markets – traditionally favouring high-growth stocks. For the past ten years, value companies have lagged as established brands’ business models have been upended by start-ups. This picture seems to have shifted and value stocks appear to be staging a fightback thanks to stronger balance sheets.
Despite these risks to the outlook, we do not believe an imminent recession is likely, but the environment does require careful scrutiny for investors.