Our investment strategy recommendations for December by Florent Brones
Our base scenario for 2019 remains favourable for risk assets as fundamentals are still positive.
The current market consolidation is largely due to unresolved political issues (US-China trade tensions, Italian fiscal policy, Brexit). A transition phase has started to trend towards lower economic growth, without a recession, but also towards more synchronisation between mature economies. Short-term volatility is expected to remain high, depending on political announcements.
Our base scenario for 2019 remains favourable for risk assets as fundamentals are still positive. Profits continue to rise, albeit more slowly, especially in the United States, interest rates are historically very low as inflation remains timid and stock markets are not too expensive. This consolidation is an opportunity to strengthen positions, if necessary.
We have turned buyers of oil and expect a 12-month range of $65-75 per barrel. The price decline in November was overdone. The supply-demand for oil markets is rebalancing as we expect an extended OPEC agreement to limit growth in crude oil production. Demand will continue to grow, particularly in emerging markets. We reiterate our positive view on gold for its diversification virtues. Indeed, gold played this role in October/November, despite the appreciation in the dollar. Neutral view maintained on industrial raw materials.