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Market Outlooks
Trends in Advisor Behavior During Market Volatility - Week of May 18, 2020
Last week was a return to "normal" for advisor activities. Trading volume was close to the average seen in 2019. Advisors were neutral on risk - more risky and less risky investments were both near net zero in flows.
Market Outlooks
Replay Market Monitor – Evaluating Opportunities and Risks
Today’s market has eclipsed both the Global Financial Crisis and Tech Bubble in terms of the underperformance of value investing - this call is an opportunity to hear directly from the investment team how BMO interprets these events and reacts to them via proprietary tools and processes.
Market Outlooks
How We’re Positioning Portfolios to Outperform
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President and Global Chief Investment Officer Daniel Needham explains how asset valuation allows us to calculate expected returns for the long-term.
Market Outlooks
Our Valuation-Driven Asset Allocation Views Looking Beyond COVID-19
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While we haven’t faced a global pandemic of this kind before and the path to normalization is uncertain, we are encouraged by the aggressive policy response from central banks and governments which we think will be effective in averting a financial crisis. Thus, we think the recent sell-off has created significant opportunities for long-term investors like us. Read our commentary to learn our latest thinking.
Market Outlooks
Where We See Opportunities Ahead
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The news today makes the short-term economic outlook uncertain. Yet, we invest for the long term, not just for the next few months or even years. Given the attractive valuations we saw near the end of the first quarter, we think long-term returns look much better for investors now than they did just three months ago.
Please join our discussion with President and Global Chief Investment Officer Daniel Needham, Co-Head of Target Risk Strategies Dan McNeela, and Head of US Equity Strategies Michael Corty.
Market Outlooks
What’s next for China?
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As the first country to tackle COVID-19, China has institutional investors globally wondering about the local situation – and what it means for their portfolios. June Lui, Portfolio Manager, BMO LGM Investments, gives an on-the-ground assessment of China’s economic backdrop and the impact on stocks.
Market Outlooks
The enemy of a major economic slump is debt
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This is a hard commentary to write. The situation is obviously very grave but also extremely fluid and no one has any special or privileged insight as to when a degree of normality may return. All pandemics end but it would be foolish on our part to suggest that it will be over within a few months. What is clear is that the world is tumbling into a serious global recession with significant unemployment. When both supply and demand collapse the end result is obvious and unavoidable. Governments and central banks have thrown several kitchen sinks at the crisis but with a world in lock-down it does little to lift economic activity. Expenses go up but incomes go down.
Market Outlooks
Virus starts with v but ends with u-shaped
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2020 began largely as we expected from an economic perspective, but as the first quarter ended it was difficult even to remember what “normal” economic times looked like, that is, before COVID-19 mushroomed and became a global health crisis.
Before the situation deteriorated in late February, many economists expected the economic effects of the virus to be primarily felt in the first and second quarters with a “v-shaped” recovery to follow. Now many expect a “u-shaped” recovery occurring perhaps by year-end. Economic indicators can lag the headlines, but U.S. unemployment had already begun to spike as the first quarter ended with more to come, likely climbing to double digits as large segments of the economy remain shut down in an effort to contain the virus. We have seen second-quarter annualized GDP estimates ranging from -5% to -30%, but the unprecedented combination of a pandemic and the modern global economy makes this very difficult to call. The numbers will be painful, regardless of the precise magnitude. In terms of the human cost, the pain is already acute.
Market Outlooks
Corporate credit spreads widened aggressively in March 2020
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Credit markets have seen extreme repricing over the past month as a result of the market stress caused by coronavirus and its impact to the economy. The period through March 26 saw some of the most aggressive corporate spread widening in history, with the worst days experiencing almost twice as much widening as any day in 2008. Global investment grade corporate credit spreads reached 340 basis points after having started the year at 102, and we saw global high yield spreads widen past 1,000 basis points as an index, which is generally the level considered the threshold for individual bonds to be considered part of distressed indices.