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Investment strategies for a late-cycle environment
Our view over the past few quarters has been that EURUSD should be rangebound, as the cyclical outperformance of the US economy is offset by the eurozone’s relatively better balance of payments position.
In 2020, the hunt for yield is likely to continue.
Last year, buybacks were all the rage; this year, the pace of share repurchases has slowed, but the pace of mergers and acquisitions (M&A) has accelerated.
This greater economic stability should bolster international earnings expectations, halting the decline seen over the past 18 months.
Global trade tensions may continue into 2020, weighing on global growth and acting as a headwind for further equity market gains.
As the U.S. becomes entirely self-sufficient and even begins to become a net exporter of oil, it is likely to keep a lid on oil prices in the long-term.
Negative effects would occur in the context of an economy less energized by fiscal stimulus than was the case last year.
The key, is to focus on high conviction ideas that are supported by structural tailwinds. However, many of these investments are tied to the technology sector.