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Please note: this article is more than one year old. The views of our CIO team may have changed since it was published, and the data on which it was based may have been revised. Forecasts are based on assumptions, estimates, opinions and hypothetical models or analysis which may prove to be incorrect.

As we start 2019, we are looking down from one investment landscape (in terms of macroeconomic, policy and corporate environments) to a markedly different one. Over the last few years, we have seen many “peaks” – peak liquidity and then, probably, peak growth in GDP and corporate earnings in 2018. By contrast, prolonged market volatility in the closing weeks of last year suggests that 2019 will be more uncertain as markets struggle to reassess the new investment reality, given a range of apparently intractable geopolitical risks, most obviously U.S./China trade relations.

But, looking through the market noise, I think that it is possible to identify a number of themes that will run through the coming year. This year we have chosen six themes, based around the macroeconomic outlook, market conditions and the major asset classes. They can be summarised as follows:

Our main hope for 2021 is that the coronavirus pandemic can be put behind us: vaccines now appear to offer a realistic prospect of this. But the debate about the policy response to the coronavirus pandemic, and its social and economic implications, is likely to continue for some years.


Great crises historically have usually taken a long time to be fully understood: academic economists are still arguing about the handling and implications of the Great Depression, nine decades later. However, as we go into 2021, we cannot wait for a full analysis. Instead, we need an initial framework to start considering what the aftermath of the coronavirus will mean for the economic, social and investment outlook.


To do this, we have structured this outlook to give four different perspectives on what the crisis has meant. We look at this issue from the perspective of individuals, businesses, the political economy and the global world order.


The political, economic and investment impacts of the pandemic seem rather different when seen from each of these four perspectives. One immediate concern is not just to identify these impacts but also evaluate their degree of reversibility in 2021. (To what extent, for example, will professional and clerical workers go back to offices?)


But, while the short-term outlook for recovery is important, we also need to see the pandemic and its implications over a longer time horizon. As well as creating new problems, the pandemic has also accelerated or exacerbated many pre-existing economic and investment trends. And, running through all these trends, four “Ds” (4Ds) are often to the fore: divergence of income, wealth and economic progression within and between economies; digitalisation and its impact on how individuals, businesses and governments operate; demographics as long-term pre-existing shifts in population distributions change political and economic priorities; and, finally, debt – both public (as government fiscal deficits balloon) and private. 

Theme 1: Economy

Growth deceleration

Global growth is slowing and becoming less synchronised. As the U.S. upswing matures, Europe will suffer from political uncertainty and risks remain around China. But, despite monetary policy tightening, growth will not collapse.

Theme 2: Capital markets

Vigilant on volatility

Markets are struggling with the transition to a more normal policy environment. Other underlying volatility triggers will remain – including geopolitics, and softer GDP and earnings growth. Lower returns are likely for a given level of risk.

Theme 3: Fixed income

U.S. yields on the return

After a decade, we have got used to low yields on bond investments. Now, in the U.S. at least, this is changing, with the short end of the yield curve now attractive. Other fixed income opportunities exist, but so do risks – be selective.

Theme 4: Equities

Earnings ease

Looking through recent volatility, global equities still have a lot going for them. Earnings growth could however fall short of expectations as global markets adjust to reality – as a result, we expect lower but still positive 12-month equity returns.

Theme 5: FX & commodities

U.S. dollar and oil centre-stage

We expect continued U.S. dollar strength in early 2019, but think that it will be gently eroded during the course of the year. After a sharp decline in oil prices at the end of last year, supply constraints should support some recovery in 2019.

Theme 6

Long-term investment – Tech transition

Our “tomorrow’s themes today” now include ESG (environmental, social, governance) and enhanced infrastructure investment. But this may be the year to re-evaluate preferences within the tech sector as regulation bites and sector trends diverge.

The report “Beyond the peaks – Investment themes for the world ahead” has further sections on multi asset and alternatives investment.  It also includes our new macroeconomic and financial market numeric forecasts for 2019.

The following regional editions of the full report are available for download: 

CIO Insights - Beyond the peaks - 2019 (Europe EN)


CIO Insights - Beyond the peaks - 2019 (Americas EN)


CIO Insights - Beyond the peaks - 2019 (Emerging Markets EN)

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