The Big Theme 

Look to equity income for growth with less downside risk

Look to equity income for growth with less downside risk

Equities have been on the rise for much of 2019, with several stock markets achieving double-digit returns over the first half of this year. But many of these struggled in August as trade war rhetoric ramped up between the US and China, and financial metrics pointed to the growing likelihood of a recession in the world’s biggest economy. The US yield curve, or the shape represented by yields on US government bonds of different maturities, has inverted. This occurs when short-dated bonds yield more than debt with a later maturity date and has helped predict several recessions. Add this to signs of global economic growth slowing, and investors have plenty of reasons to tread carefully.

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