Fiera Capital Global Financial Forecast 2018-2025: Inflation fears and rising rates pave way for recession

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Jun 06, 2018, 05:00 ET

2018-19 investment outlook tempered by strong performance in 2017
Central banks expected to adopt a "timid" approach to interest rate rises
"Mild" recession forecast for late 2020 or early 2021

MONTREAL, NEW YORK and LONDON, June 6, 2018 /PRNewswire/ - Fiera Capital Corporation (TSX: FSZ) ("Fiera Capital" or the "Firm"), a leading independent asset management firm with more than C$136 billion (approximately US$ 105 billion) under management, released today its updated Global Financial Forecast 2018-2025 ("Report"). Looking ahead seven years, the usual length of an economic cycle, the forecast seeks to provide guidance for investors who are seeking both to structure their portfolios within the current market environment and prepare for future policy developments.

Francois Bourdon, Global Chief Investment Officer, commented: "Our seven year outlook focuses on the key driving forces of return and looks for key market differentiators and changes. Markets continue to normalize, central banks look set to continue raising interest rates, and global politics are expected to have an increasing influence over investments and returns. Meanwhile overall market growth looks set to continue for the next couple of years driven by improved productivity and increased capacity usage leading to a mild recession in late 2020 or early 2021."

Five Key Global Drivers

The Report outlines five key global trends that may influence and characterize the investment environment over the next seven years.

Productivity: Productivity is expected to improve from current levels as local economies leverage advances in technology. Tax code changes should structurally favor investments helping to produce more with less.
Demographics: Income-producing assets have been the beneficiary of an aging population and retirement inflows into investment vehicles have supported markets. As baby boomers retire, the support from money flow should diminish.
Business Cycle: A full business cycle including a recession and a recovery remains our call for the next 7 years. Global economic growth has been synchronized recently and excess capacity is being utilized. Credit availability remains plentiful but inflation has increased and tightening of credit conditions should come in the next two to three years.
Central Banks: Their role remains important but normalization of monetary policy is underway and their impact should reduce with time.
Politics: Protectionism and less regulation remain key factors to our outlook. As expected, the United States has been very active in trying to change the trade equation. Also, they have significantly reduced corporate taxes and the regulatory burden. A factor that is increasing in importance is the risk of important armed conflicts.

Four Key Financial Market Factors

We continue to believe that four key factors remain set to impact financial markets going forward.

Growth: We continue to believe an increase in consumer demand will spur growth levels, with economies expanding across most geographies. Growth in the U.S. is expected to approach three percent, on a par with its historical average.
Inflation: Investors can expect higher rates of inflation over the next seven years. As a result of past monetary policy decisions starting to have an impact on stimulating demand, we continue to believe the global economic focus will shift from deflationary fears towards inflationary pressures. Inflation in the U.S. is predicted to rise to 2.5 percent.
Valuations: Valuations may normalize towards 2025, with interest rates expected to rise to the 4-5 percent range as we escape progressively from the current unusual period of emergency interest rates and low inflation.
Liquidity: Given lower levels of central bank activity, liquidity will be reduced progressively.

Francois Bourdon, Global Chief Investment Officer, added: "Fiera Capital's multi-asset approach assesses a wide range of asset classes including non-traditional strategies. At present, traditional strategies including fixed-income and equities generally do not rate too highly. We think that asset classes such as infrastructure, agriculture and hedge funds however, are looking more interesting. We believe a greater focus on these assets will position portfolios more favorably for the future."

Important Disclosures

The information and opinions expressed herein and the Report are provided for informational purposes only, are subject to change and should not be relied upon as the basis of any investment or disposition decisions. Past performance is no guarantee of future results. All investments pose the risk of loss and there is no guarantee that any of the benefits expressed herein will be achieved or realized.

The information provided herein and in the Report does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. Any opinions expressed herein or in the Report reflect a judgment at the date of publication and are subject to change. Although statements of fact and data contained in this press release and the Report have been obtained from, and are based upon, sources that we believe to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. No liability will be accepted for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material.

Certain information contained herein and in the Report constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue," or "believe" or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance may differ materially from those reflected or contemplated in such forward- looking statements.

Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any funds or accounts managed by any entity of the Fiera Capital. For more information please also consult the Report at the link set out above.

Fiera Capital Corporation is a global asset management firm with affiliates in various jurisdictions (collectively, "Fiera Capital"). Each entity of Fiera Capital only provides investment advisory services or offers investment funds in the jurisdictions where such member and/or the relevant product is registered or authorized to provide such services pursuant to an exemption from such registration. These include the entities listed below. Where an entity operates under an exemption from registration (the "Exempt Entities"), only its jurisdiction of incorporation is listed. Details on the particular registration and offering exemptions for the Exempt Entities' activities are available upon request.

Fiera Capital Corporation - Canada, registered: (i) in the categories of exempt market dealer and portfolio manager in all Provinces and Territories of Canada (ii) in the category of investment fund manager in the Provinces of Ontario, Québec, Newfoundland and Labrador; (iii) as a commodity trading manager pursuant to the Commodity Futures Act (Ontario), (iv) as an adviser under the Commodity Futures Act (Manitoba) and, (v) in Québec, as derivatives portfolio manager pursuant to the Derivatives Act (Québec);
Fiera Capital Inc. - United States, registered as (i) an investment adviser with the U.S. Securities and Exchange Commission (the "SEC")* and (ii) a commodity pool operator with the U.S. Commodity Futures Trading Commission.
Bel Air Investment Advisors LLC - United States, registered as an investment adviser with the SEC*.
Fiera Capital (UK) Limited - United States, registered as an investment adviser with the SEC*. United Kingdom, authorized and regulated by the Financial Conduct Authority.
Fiera Capital (IOM) Limited - United States, registered as an investment adviser with the SEC*. United Kingdom, licensed by the Isle of Man Financial Services Authority.
Fiera Capital Limited - A company registered in the Cayman Islands.
Fiera Properties Limited - A corporation incorporated under the laws of the province of Ontario (Canada).
Fiera Private Lending Inc. - A corporation incorporated under the laws of the province of Québec (Canada).
Fiera Infrastructure Inc. - A corporation incorporated under the laws of Canada.
Fiera Comox Partners Inc. - A corporation incorporated under the laws of Canada.

*Registration with the SEC does not imply a certain level of skill or training.

About Fiera Capital Corporation

Fiera Capital is a leading independent asset management firm with approximately C$136.4 billion in assets under management as of March 31, 2018. The Firm provides institutional, retail and private wealth clients with access to full-service integrated money management solutions across traditional and alternative asset classes. Fiera Capital provides a depth of expertise, diversified offerings and outstanding service. Fiera Capital trades under the ticker FSZ on the Toronto Stock Exchange. www.fieracapital.com

In the U.S., asset management services are provided by the Firm's U.S. affiliates who are investment advisers that are registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training.

Additional information about Fiera Capital Corporation, including the Firm's annual information form, is available on SEDAR at www.sedar.com.

SOURCE Fiera Capital Corporation