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Tactical Asset Allocation – October 2020

Tactical Asset Allocation – October 2020



Macro update

We believe the global economy continues to improve and we expect its upward trajectory to persist for the rest of the year. Based on our macro regime framework, the global business cycle remains solidly in a recovery regime, with growth below trend and expected to improve over the next few months. The recovery is strengthening in its depth and breadth, as our leading economic indicators suggest growth is broadening across regions. While global equity and credit markets experienced declines over the past month, our measures of global risk appetite remain in an improving trend, indicative of improving growth expectations (Figure 1).

Figure 1: Leading economic indicators and market sentiment suggest the global economic recovery continues across all regions.

Sources: Bloomberg L.P., Macrobond. Invesco Investment Solutions research and calculations. Proprietary leading economic indicators of Invesco Investment Solutions. The Leading Economic Indicators (LEIs) are proprietary, forward-looking measures of the level of economic growth. The Global Risk Appetite Cycle Indicator (GRACI) is a proprietary measure of the markets’ risk sentiment

Investment Positioning

We have not implemented any change in our portfolio over the past month (Figure 2). We maintain a higher risk posture than the benchmark1 in our Global Tactical Asset Allocation model, sourced through an overweight exposure to equities and credit at the expense of government bonds. In particular:  

  • Within equities we hold large tilts in favor of developed markets outside the US and emerging markets, driven by more favorable cyclical conditions, attractive local asset valuations and an expensive US dollar. The confluence of these medium and short-term drivers increases the potential for long-term capital inflows in non-US equity markets. As a result, we hold a large underweight position in US equities, especially in quality and momentum stocks, given our tilts in favor of value and (small) size factors, which we believe should eventually benefit from higher operating leverage and a recovery in the global earnings cycle.
  • In fixed income we maintain an overweight exposure to US high yield credit, emerging markets sovereign dollar debt, and event-linked bonds at the expense of investment grade corporate credit and government bonds, particularly in developed markets outside the US. Overall, we are overweight credit risk and neutral duration2 versus the benchmark.
  • In currency markets we maintain an overweight exposure to foreign currencies, positioning for long-term US dollar depreciation. Within developed markets we favor the Euro, the Canadian dollar and the Norwegian kroner. In emerging markets, we favor the Indian rupee, Indonesian rupiah and Russian ruble.

Figure 2: Tactical Asset Positioning

Source: Invesco Investment Solutions Advisory Team, September 2020. 1. Global 60/40 benchmark (60% MSCI ACWI/40% Bloomberg Barclays Global Agg USD Hedged). Taking on an average of 3% Tracking Error. For illustrative purposes only. An investment cannot be made into an index. Past performance is not a guarantee of future results. Equities represented by light blue dots and bond by dark blue.

US election scenarios and investment implications

Our investment process does not explicitly consider, or position for, the outcome of the US election. As discussed in more detail below, we believe the overall performance of risk assets is likely to be positive over the medium term (multiple months or quarters) regardless of the election outcome, and it can be driven by more enduring drivers of market performance such as growth, fiscal and monetary policy. However, the outcome of the election could have lasting consequences in terms of relative sector and regional performance for equity markets, depending on future changes in fiscal and trade policy over the coming years. While it is important to outline the potential impact of these alternative developments, we do not position for either outcome ahead of the election and follow our macro-driven investment process.

From a risk analysis standpoint, we evaluate three election scenarios, sorted from most positive to least positive in terms of expected impact on our portfolio. Before discussing the potential outcomes, however, it’s important to discount the near-term uncertainty that will likely characterize the days and weeks after Election Day. Given the high number of absentee ballots expected to be cast this year, processing times are likely to be slower than in previous elections, and it may take several weeks to process the vote count, in our view. States certification deadlines generally range between 1-2 weeks post-election day. Furthermore, given the pandemic, some states may ask for an extension. Therefore, regardless of whether election results will be contested, markets will likely need to digest some uncertainty for a few weeks after election day. We believe these developments to yield a neutral impact on our model portfolio. Rising risk aversion may provide a headwind to our equity, credit and foreign currency overweight. On the other hand, our relative value tilts in equities may benefit from a rise in the US political risk premium, given an underweight to US equities and overweight to global ex-US markets. Similarly, an unwind of extended positioning in momentum/growth sectors may potentially benefit our positioning in value sectors.

Biden Win + Democratic Congress

Among all scenarios, we believe a Democratic win of the White House and Congress would deliver the potential for meaningful policy changes. Overall, we think the impact on equity and credit markets is likely to be positive in the medium-term, despite risks of an initial sell-off. Given the fragility of the post-COVID job and growth environment, we believe the Biden proposal for higher corporate and personal income taxes is likely to be delayed and/or dampened. In addition, projected increases in infrastructure spending should support growth in the near term and provide an offset to negative impact from higher taxation3. Reduced trade policy uncertainty may also benefit risk assets, as, in fact, trade policy was the largest headwind to global growth in 2019. We expect this scenario may have a positive impact on our model portfolio, with emerging and developed markets outside the US being the main beneficiaries of lower trade uncertainty, and the US dollar likely to depreciate in tandem. Changes in fiscal policy may provide a catalyst for the long-awaited cyclical rotation from growth/momentum sectors into value sectors, with materials and industrials to potentially benefit from large infrastructure spending, and consumer discretionary to potentially benefit from higher minimum wage proposals.

Biden Win + Split Congress

In this scenario, we believe equity markets outside the US, particularly emerging markets can benefit from lower trade policy uncertainty and a more diplomatic engagement by the White House on trade disputes with other countries. However, a split Congress should translate into largely unchanged fiscal policy on matters such as healthcare, infrastructure spending, minimum wage and tax reform. Historically, policy impasse has often translated into a “no news is good news” narrative, which tended to favor risk assets and dampened markets volatility. However, this scenario would probably preserve the status quo in terms of relative sector performance, potentially minimizing one catalyst for the growth-to-value rotation. We believe this scenario may have a moderately positive impact on our model portfolio.

Status quo: Trump Win + Split Congress

A continuation of the status quo should be received well by risk assets, lead to US dollar strength in the near term, and reinforce the trend of US equity outperformance, especially for growth and momentum stocks, in our view. A continuation of the current trade policy framework is likely to be a headwind for emerging and developed market equities outside the US, on a relative basis. This scenario would likely deliver a negative impact on our model portfolio, given our overweight exposures to value, size, foreign exchange and equity markets outside the US.


1. Source: Global 60/40 benchmark (60% MSCI ACWI / 40% Bloomberg Barclays Global Aggregate USD Hedged).

2. Source: Credit risk defined as DTS (duration times spread).

3. Source: The Congressional Budget Office estimates that a Democratic Platform could lead to an additional $2trl in deficits over the next decade relative to the current baseline.

Important Information

Blog Header Image: Denys Nevozhai / Unsplash

The Barclays Global Aggregate Index is an unmanaged index considered representative of the global investment grade, fixed income markets.

The MSCI All Country World Index is an unmanaged index considered representative of large- and mid-cap stocks across developed and emerging markets.

Credit risk defined as DTS (duration times spread).

Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their financial professionals for a prospectus/summary prospectus or visit

The opinions expressed are those of Alessio de Longis as of September 9, 2020, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions, there can be no assurance that actual results will not differ materially from expectations. Diversification does not guarantee a profit or eliminate the risk of loss.

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Kennedy Krieger receives $5 million grant to expand reach of its pediatric post-COVID-19 clinic and support school students

BALTIMORE, October 17, 2023—Researchers at Kennedy Krieger Institute have received a $5 million grant from the U.S. Department of Health and Human Services…



BALTIMORE, October 17, 2023—Researchers at Kennedy Krieger Institute have received a $5 million grant from the U.S. Department of Health and Human Services (HHS), through the Agency for Healthcare Research and Quality (AHRQ), to expand access to comprehensive care for children and adolescents with long COVID-19, particularly among underserved populations.

Credit: Kennedy Krieger Institute

BALTIMORE, October 17, 2023—Researchers at Kennedy Krieger Institute have received a $5 million grant from the U.S. Department of Health and Human Services (HHS), through the Agency for Healthcare Research and Quality (AHRQ), to expand access to comprehensive care for children and adolescents with long COVID-19, particularly among underserved populations.

During the five-year project, researchers at the Pediatric Post-COVID-19 Rehabilitation Clinic will receive up to $1 million annually to expand and strengthen its integrative services in Baltimore and the overall mid-Atlantic region. This expansion will involve developing resources to help school nurses and other healthcare professionals identify long COVID in students, educate community leaders, and create accommodations to help children with long COVID-19 succeed in school, life and their community.

In addition, researchers will launch an Extension for Community Healthcare Outcomes (ECHO) project specifically for pediatric long COVID-19. ECHO is a model to train community health providers to recognize, diagnose and treat patients with complex diseases who lack access to specialty health care providers in their communities. Kennedy Krieger researchers will assist providers and patients in low-resource areas, including rural locations and among underserved minority populations. Dr. Laura Malone, co-director of the Institute’s Pediatric Post COVID-19 clinic and principal investigator on this grant, anticipates that expanding capabilities will benefit the region.

“Right now, about 150 patients are currently being evaluated by our clinic. Our aim is to increase the reach of our knowledge and care to those that may not be able to travel to see us, or may not need a full, comprehensive treatment plan,” Dr. Malone said “In particular, there are not a lot of clinics out there that serve pediatric patients who have experienced post-acute COVID-19. We are the only pediatric organization to be awarded this AHRQ post COVID-19 research grant.”

Long COVID is defined as persistent conditions that continue after the initial infection has resolved. Pediatric symptoms are similar to those in adults and can include chest pain, fatigue, exercise intolerance and brain fog. However, a primary distinction between treating adults and children is the difficulty of identifying symptoms in children and teenagers who may struggle to articulate and advocate for their health. Dr. Malone has observed this challenge at the clinic.

“What we see is that [long COVID] can take a significant effect on the quality of life. Lasting effects not only impact the functioning of the child, but also the family,” Dr. Malone explained. “Children may not always have the developmental ability to really identify and understand what is happening to them. They may not be able to express their symptoms. There are important developmental aspects to consider as to how long COVID-19 effects their function, social development, and more.”

Between 5% and 25% of U.S. children who have been infected by the SARS-CO-V2 virus, have experienced long COVID, said Dr. Malone, who helped create national guidelines for practitioners treating children with long COVID. She emphasized that, despite the low percentage, there exists a population of pediatric patients that need help understanding and overcoming the lasting symptoms.

“Comparing that percentage range to the number of children who have been infected by the SARS-CoV-2 virus, that’s still a really high number of children that need resources, assistance, and care,” Dr. Malone said. “Providing those services and resources is one of the main goals for us to take on with this grant.”

The grant affirms the importance of the world-class research happening in Baltimore, said Dr. Stacy Suskauer, vice president of pediatric rehabilitation at Kennedy Krieger and director of the Division of Pediatric Rehabilitation in the Department of Physical Medicine and Rehabilitation at Johns Hopkins Medicine.

“We are proud to have Dr. Malone and the entire team of highly experienced and innovative specialists recognized by this grant,” Dr. Suskauer said, “This expansion will allow us to extend our reach to provide rehabilitation to more children who are experiencing prolonged symptoms of long COVID and continue Kennedy Krieger’s commitment to increasing access to exceptional care.”




About Kennedy Krieger Institute 
Kennedy Krieger Institute, an internationally known, non-profit organization located in the greater Baltimore/Washington, D.C. region, transforms the lives of more than 27,000 individuals a year through inpatient and outpatient medical, behavioral health and wellness therapies, home and community services, school-based programs, training and education for professionals and advocacy. Kennedy Krieger provides a wide range of services for children, adolescents and adults with diseases, disorders or injuries that impact the nervous system, ranging from mild to severe. The Institute is home to a team of investigators who contribute to the understanding of how disorders develop, while at the same time pioneer new interventions and methods of early diagnosis, prevention and treatment. Visit for more information about Kennedy Krieger.


Taylor Gleason
804-318-6992 (cell)

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Australian dollar calm after RBA minutes

RBA releases minutes Investors eye Israel-Hamas war The Australian dollar has extended its gains on Tuesday. AUD/USD is trading at 0.6353 in Europe, up…



  • RBA releases minutes
  • Investors eye Israel-Hamas war

The Australian dollar has extended its gains on Tuesday. AUD/USD is trading at 0.6353 in Europe, up 0.18%.

It has been a rough patch for the Australian dollar lately. The Aussie hasn’t managed a winning week since September and dropped close to a one-year low last week. The Australian dollar has rebounded this week, gaining close to 1%, as the US dollar has lost some steam.

We’ve been hearing a lot about the Fed’s “higher for longer” stance and the markets are less confident that the Fed is done with the current tightening cycle than they were a few months ago. The fighting in the Middle East has created a new “higher for longer” in terms of uncertainty, which could result in elevated volatility in the currency markets.

The US dollar, a trusted safe-haven asset, has not benefited from the latest turmoil in the Middle East, at least not yet. There is widespread concern that the Israel-Hamas war could spread to Lebanon and even to Iran. The US is determined to halt any contagion and has dispatched aircraft carriers to the region.

The Reserve Bank of Australia released the minutes of this month’s meeting earlier today. The central bank held rates at 4.10% for a fourth straight time, but the minutes showed that there was consideration to raise rates by a quarter-point.

The board members noted that inflation was well above the 2%-3% target and “was expected to do so for some time”, with rising fuel prices adding to headline inflation. The minutes noted that the current tightening cycle continued to filter through the economy and the full effects were yet to be felt.

The RBA meets next on November 3rd and members will have plenty of data to chew on ahead of the rate decision. Australia releases an employment report on Thursday, inflation next week and economic forecasts prior to the meeting. The RBA has said that rate decisions will be data-dependent, and these releases will determine whether the RBA extends its pause phase or delivers a rate hike.


AUD/USD Technical

With the Australian dollar showing limited movement, the support and resistance levels are unchanged from Monday:

  • AUD/USD continues to test resistance at 0.6343. Above, there is resistance at 0.6399
  • 0.6240 and 0.6184 are providing support


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BBC Suspends Several Arabic Journalists For Social Media Posts Endorsing Hamas Terror Attack

BBC Suspends Several Arabic Journalists For Social Media Posts Endorsing Hamas Terror Attack

Authored by Thomas Brooke via Remix News,




BBC Suspends Several Arabic Journalists For Social Media Posts Endorsing Hamas Terror Attack

Authored by Thomas Brooke via Remix News,

The BBC has suspended several of its journalists associated with the BBC Arabic news portal and launched an internal investigation into their actions after staff appeared to endorse Hamas’ terror attack in Israel.

Reporters working for the British taxpayer-funded corporation in the Middle East were found to have made several communications and interactions on social media in relation to the bloody offensive by Hamas that left more than 1,300 Israeli civilians dead, sparking a number of complaints over perceived bias within the organization.

An independent investigation by the U.S.-based Committee for Accuracy in Middle East Reporting and Analysis (CAMERA), reported its findings to the BBC, providing evidence of concerning behavior by several members of the organization.

One journalist allegedly described the atrocities committed by Hamas on Oct. 7 as a “morning of hope,” while another posted on X, formerly Twitter, that the attack had left “Israel’s prestige crying in the corner.”

Others, including Cairo-based correspondent Salma Khattab, liked a post describing Hamas as “freedom fighters,” while Beirut-based programs editor Nada Abdelsamad reposted footage of Israeli civilians in hiding who were described as cowering “inside a tin container in fear of the Palestinian resistance warriors.”

Another senior correspondent was reported to have poked fun at the relatives of an Israeli grandmother who was abducted by Hamas and is being held captive in Gaza.

In addition to the remarks of certain individuals, the impartiality of BBC Arabic’s output, both through its TV channel and news website, has been called into question after referring to towns within the recognized state of Israel as “settlements” and the local residents as “settlers.”

In total, six reporters and a freelance journalist have become the subject of an investigation into alleged anti-Israel bias, and some of those involved have been suspended.

Freelancer Aya Hossam liked a post that suggested that no Israeli could be classed as a civilian, as “every member of the Zionist entity served in the army at some point in his life, whether men or women, and they all had victims of explicit violations… This term ‘civilians’ applies to the animals and pets that live there and they are not seriously at fault.”

Hossam also reposted a comment that read, “The Zionist must know that he will live as a thief and a usurper.”

CAMERA accused the broadcaster of “whitewashing the practice of targeting Jewish civilians.”

“They constantly claim that they apply the same editorial standards of accuracy and impartiality to their services in all languages, including those with which BBC management is not familiar and can’t oversee properly, such as Arabic. But these lapses do not occur anywhere near as frequently in their English language content, so that can’t be taken seriously,” a statement from the U.S.-based organization read.

On Sunday, the BBC issued a statement announcing the investigation and confirmed that Ms. Hossam would no longer be working with the organization.

“We take allegations of breaches of our editorial and social media guidelines with the utmost seriousness, and if and when we find breaches we will act, including taking disciplinary action,” a spokesperson said.

The public broadcaster has been embroiled in controversy following the attack on Israel, which has sparked formidable retaliation in Gaza after editors refused to refer to those involved in the Hamas surprise attack as “terrorists.”

This is despite Hamas being classified as a proscribed terror organization by the U.K. government back in 2021, thus justifying the use of the term for a corporation that strives to be impartial.

Tyler Durden Tue, 10/17/2023 - 05:00

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