Diversified Alternatives Portfolio Manager John Fujiwara explains why he believes conditions are ripe for a rotation toward previously out-of-favour value and cyclical stocks, and why he expects the shape of the yield curve to hold significant clues about the state of the economy.
- A crowded market favoring low-volatility, defensive and growth stocks has left valuation differentials at such levels that improving economic conditions could lead to a strong
rotation toward value and cyclical names.
- With the trade impasse affecting much of the global economy, investors should monitor
future developments, as they may determine whether 2019’s softness has played out.
- The level of interest rates and the shape of the yield curve should not only provide clues on
the state of the economy and inflation but also be key determinants in how investors
position themselves for 2020 and beyond.