U.S. trade policy and dollar strength will remain key factors for markets over the next 6 to 12 months, according to Lazard Asset Management.
The Lazard Multi-Asset Team’s recent manager letter discusses recent developments behind the latest changes to the team’s market forecast.
“How U.S. policy shifts as we move past the midterm elections in November will be critical for the direction of global markets,” the letter states. “Risk assets like emerging markets equity and debt, which have been especially vulnerable to new barriers to the flow of commerce, may find support should the hardline rhetoric be dialed down (although there is no guarantee of that).”
The Lazard Multi-Asset Team also believes countries with material external vulnerabilities, negative fiscal balances or local companies that are highly levered in dollars will likely continue to underperform. The team says this could outweigh the positive effects of recent synchronized economic growth and drive further divergent near-term performance of U.S. and non-U.S. markets.
According to Jai Jacob, portfolio manager leading Lazard’s Multi-Asset investment team, the team typically changes allocations between four and six times a year.
“It’s not periodic,” he said during a recent media briefing in New York. “It’s more episodic, in the sense that when we think something has changed we will allocate.”
Lazard’s multi-asset portfolios reflect its assessment of the global economy and the investment landscape 6 to 12 months into the future.