23 February 2017: Paris Syndrome
– Looming elections in Europe, the UK’s talks on EU exit, and the evolving policies of the new Trump administration all pose risks.
– The outlook for international stocks is favorable in spite of political concerns. Economic data has been beating expectations in most parts of the world, market momentum is positive, and volatility has been low.
– The US currency has benefited from expectations of fiscal stimulus and the chance of fund repatriation from US multinationals. But CIO does not regard the US dollar as the best investment to benefit from the US economic recovery or the likely pro-growth agenda of the Trump administration.
– CIO is overweight global equities, US stocks, and US high yield credit versus high-quality sovereign and corporate bonds. CIO is overweight the EUR versus USD, overweight SEK versus CAD, and overweight a basket of emerging market currencies against a basket of developed market currencies