The U.S. 10 years into recovery

April 2, 2019

A decade can feel like eternity in financial markets. It can be hard to remember the mood back in early 2009 when the Global Financial Crisis (GFC) first struck. There was talk of the end of capitalism and that many of our great financial institutions were potentially worthless. What we got, in my opinion, were revolutionary, well-coordinated responses from the world’s central banks: first, the aggressive cutting of interest rates, followed by successive rounds of quantitative easing (QE). And it worked, to an extent. The world avoided a second great depression. Economies began to grow again, although that growth has been pretty anemic in some countries.

In my opinion we can draw three broad conclusions from the performance data in the 10 years since the end of 2008: 1) The winners have been those who suffered least from the banking crisis, or formulated strong policies to counter it; (2) The losers have been the ones with the weakest banks and/or the poorest policies; 3) Most markets saw a negative return in dollar terms.

And three implications for investors: 1) Think hard about how, where, when and why monetary policy is likely to change; 2) Avoid domestic bias – maintain a geographically diverse portfolio; and 3) Think hard about managing currency risk – and dollar exposure in particular.

Note: Country returns represent local market indices priced in USD. The returns are calculated as the total return between 12/31/08-12/31/18. Charts are provided for illustrative purposes and are not indicative of the past or future performance of any Dreyfus product. Investors cannot invest directly in an index.

Shamik Dhar, Chief Economist, BNY Mellon Investment Management

June 11, 2019
 

Road to recovery

May 29, 2019
 

Tipping the balance

May 14, 2019
 

Foraging for value

Index definitions:

S&P 500: The Standard & Poor's 500 is a US stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. Its components and their weightings are determined by S&P Dow Jones Indices.

MSCI ACWI: The MSCI ACWI Index captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,499 constituents, the index covers approximately 85% of the global investable equity opportunity set.

MSCI EM: The MSCI Emerging Markets Index (net of foreign withholding taxes) is a free float-adjusted market capitalization weighted index designed to measure the equity performance in the global emerging markets. The index consists of 23 MSCI emerging market national indices.

MSCI EX US: The Morgan Stanley Capital International All Country World ex U.S. Free Index is a free float-adjusted market capitalization weighted index that is designed to track the performance of both developed and emerging market countries, excluding the United States. The index consists of 48 MSCI national market indices. MSCI Free Indices reflect investable opportunities for global investors by taking into account local market restrictions on share ownership by foreigners.

All investments involve risk, including the possible loss of principal.

Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees.

Diversification cannot assure a profit or protect against loss.

BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally.

Views expressed are those of the advisor stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Adviser, Inc. and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon.

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