Innovation α® Indexes Rebalance Highlights as of July 1, 2019
Summary:
July 1, 2019 Rebalance Highlights
Innovation α® Indexes
July 1, 2019 Rebalance Highlights
The second quarter of 2019 saw remarkable market uncertainty despite a secular growth in the equity markets generally. While trade disputes between the United States and China dominated the headlines, underlying concerns about global growth, the perceived limited effectiveness of Central Bank policy, and the potential geopolitical conflicts undermined confidence. Traditional financial metrics were mixed. Employment, interest rates, and growth expectations remain low with few inflationary concerns in most markets. The Federal Reserve Bank of New York’s Center for Microeconomic Data reported the 19th consecutive quarter during which total household debt increased with delinquencies increasing on the $13.67 trillion outstanding as of the end of the 1st quarter of 2019. Similarly, corporate debt expanded during the same period. Most alarming is the government indebtedness which continues to grow at a rate that limits the capacity to invest in infrastructure, long-term development and pro-stimulus activities. Across the world, corporate debt growth has grown in advanced economies by over 70% and in emerging markets (led by China) by 395% in the past decade.
While non-financial debt has fueled corporate share buybacks, mergers, acquisitions, and dividends, concerns of the long-term effect of this growing indebtedness places headwinds on corporate performance outlooks in developed and emerging economies.
M·CAM’s view of innovation activity by corporations around the world reveal that several companies have used the first two quarters of 2019 to invest in agility in manufacturing and distribution – concerns highlighted in the recent tariff and trade war environment. Technology transfer as a component of global procurement continues to play a role in transactions but is falling out of favor in a number of markets.
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