MAI views

Multi-asset investments views – November 2019 Is this as good as it gets?

Not for Retail distribution: this document is intended exclusively for Professional, Institutional, Qualified or Wholesale Investors / Clients, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.


Our views

Three positive developments are releasing some pressures on markets near term.

First, the US has reached a ‘Phase 1 deal’ with China, with an agreement in principle on agricultural goods purchases, intellectual property, FX transparency and financial services opening. This agreement warranted a suspension of the tariffs increase scheduled October 15th. However the Dec 15th tariff increase is still contingent on being able to put the agreement onto paper, with the aim to be signed at the APEC summit on 14-17 November. Our economists estimate that with Friday’s news, the US may have thus “saved themselves” an additional cost of a bit less of 0.2% of GDP. A true resolution of the “trade war” would in our view entail a dismantlement of the tariff hikes already implemented, and we are still far from this. In the meantime, trade policy uncertainty has been affecting the global economy and could continue to have an impact on investment. However, US hard data on production and orders was resilient recently and seems to have decoupled from more depressed business surveys. In this context, the trade truce could limit further downside. In this context, we have reinforced our cyclical tilt in our equity exposure as the relative valuations of cyclicals remain depressed.

Second, on the Brexit front, while the chance of an agreement looked bleak early October, Prime Minister (PM) Johnson managed to reach a deal with the European Union (EU). Saturday’s October 19th parliamentary session did not provide a conclusive vote on this deal. However, in the meantime, PM Johnson has (reluctantly) requested an extension to the Brexit deadline of October 31st and the EU is likely to grant such an extension. Therefore, the chances of a “no deal” exit are now materially lower, which should help business and market sentiment.

Third, the Fed announced a new 60bn USD per month liquidity injection through bill purchases. This is the first time this year that the Fed has acted decisively. They are trying hard not to call it QE but it will be seen by market as a liquidity boost nonetheless. With front end rates lower and term yields higher (driven also by trade deal optimism), the curve has re-steepened and back into positive territory which is a good sign (cf. chart below). In this context, we think that inflation expectations in the US are much too low and have added new positions on US inflation breakeven in our portfolios.

The US yield curve is back in positive territory

Our key convictions :

  • We have increased our cyclical tilt in our equity exposure as market pessimism on growth is still extreme. We remain prudent on US equities as prices are close to all-time highs while the underlying macro momentum is weakening.
  • Although we reduced exposure, we remain positive on Euro High Yield and Emerging Market debt as a dovish Fed is supportive of carry positions
  • We remain constructive on Eurozone and US inflation breakevens as market pricing remains too pessimistic

Our positionning :

  • Cyclical tilt in our equity exposure
  • Underweight US equities
  • Positive EM debt and Euro High Yield
  • Positive US and Eurozone inflation breakeven
  • Long equity call options delta hedged to protect the portfolios where possible

Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.


It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.


Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.


Issued by AXA INVESTMENT MANAGERS PARIS, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 353 534 506, and a Portfolio Management Company, holder of AMF approval no. GP 92-08, issued on 7 April 1992.

In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.