110218 CGI Weekly Equities Strategy Update
With the holiday season around the corner and the period of seasonal strength for global equities taking off, we believe that investors this year have to factor three themes in their modelling for year-end performance results.
- US Midterm elections, which have historically fuelled equity market volatility and preceded mostly year-end market rallies. November 7, after months of uncertainty impacting investors’ minds, the political makeup of Congress will be significant for country and sectorial equities’ allocations going forward beyond the cope of 2018.
- Q3 Corporate earnings season is in full gear, and already we have seen a number of high-profile earnings misses and downward guidance revisions. To what extent market participant’s focus on earnings disappointments could make the difference between a further market setback and a full-scale correction.
- Fixed income safe heaven for now, as over the past month, just as were predicting, bonds have again proven their value as a portfolio stabilizer. If equity market volatility continues to escalate, which we see for sure in the eventuality of a GOP loss of Congress, then fixed income allocations could help cushion the blow by making portfolios less vulnerable to unpredictable market swings. We see 10-year Treasuries to inexpensive relative to US equities, and advise investors to increase weightings towards 10-Year Treasuries, in spite of seasonal period of weakness.
Investors are facing too many fast changing unknowns, such as an all-time low 3.7% US unemployment, globally slowing (and most likely more downward adjustments and revisions of US and EU GDP growth rates {a phenomenon not rarely seen post political elections}), and likely an unsustainable US GDP rate in the 2.7% to 3.7% range, besides still measured inflation (which we continue to forecast for 2019) however, which the Federal Reserve tries to fight with another December likely rate cut.
Creative Global Investments LLC (CGI) is a Multi asset Investment Strategy & Investment Research firm. Our focus is on providing a multi asset investment strategy research based on a proprietary dynamic research process.
It identifies major themes with implications for the global financial markets and provides projections of aggregate corporate profits, valuation, profit margin, size and style trends, and long-term targets of the major equity indices. We apply fundamental, empirical, and technical research to complement its thematic and macro-driven approach. Additionally, an analytical and quantitative approach to provide a macro-economic framework, and create forecasts and projections of economic growth, inflation, and short and long-term interest rates.
We identify the sectors and industry groups most impacted by future legislative and regulatory actions, within the context of the dynamic political environment. CGI offers insights on the changing policy landscape and the risks and opportunities, utilizing contacts within the public and private sectors to provide information, to identify investment opportunity.
We have developed and fine-tuned a dynamic 6-step combination investment strategy and research methodology and process, which is integral to all Creative Global Investments LLC client research by order of priority:
- Global Macro Analysis Overlay
- Chart Technical Analysis
- Seasonality Analysis
- Fundamental Analysis
- Investor Behavioral Analytics
- Geo-political risk assessment
We can also provide customized and specific research solutions and special projects, besides capital market and corporate advisory services for private equity firms.
Our research product and regular periodic publications for various asset classes include annual and quarterly Investment Outlook & Strategy reports, weekly Strategy reports per asset class, thematic reports, sentiment indicator, which helps in analyzing the trajectory of market, sector and industry group trends. CGI caters to global institutional fixed income and equity clients.
CGI LLC was founded in 2002, and is based in New York, New York, with additional offices in Luxemburg and Croatia.
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