Quarterly Market Update


Q&A with Anne-Joëlle Viguier-Galley, BBVA’s Chief of Equity and Alternative Investments for the bank’s Global Wealth team. She also doubles as the Chief Investment Strategist for BBVA Wealth Solutions, Inc., the bank’s investment advisor affiliate. 

In this edition of the BBVA Market Outlook, Ms. Viguier-Galley discusses The Conference Board’s Leading Economic Index

1. How do you know if a recession is around the corner?

Economists, analysts and strategists have been known to be wrong more than once regarding this subject. We need to rely on a solid process to help us navigate the uncertain terrain of global investing, so that you can reach your goals with the least amount of angst possible.

As part of this process, we review many indicators and factors as well as economic, financial and political conditions around the world. One of these indicators is the Conference Board’s Leading Economic Index® (LEI) that we explain and review in this section.

The Conference Board’s Leading Economic Index, commonly referred to as LEI, has been quite reliable over time as one of many to help pinpoint a potential recession. The LEI is an aggregated metric that encompasses a variety of economic variables that tend to move before changes in the overall economy, as detailed on the next page.

Remember that it is important to review several different aspects of the economy to better measure where extremes and discrepancies may appear. Other examples of economic indicators that we keep an eye on and that may potentially warn of a recession include the yield curve, corporate profits, and the unemployment rate.

Keep in mind that any indicator should be viewed as one of many and that in the end many factors can contribute to a recession, the main causes of which often change.


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BBVA Global Wealth Investment Management Team

Chief Investment Strategist

Dan Davidson, CFP

Directors of Portfolio Management

Mary Lynn Bronner, CFA
James Engelbrecht

Susan Green

Director of Institutional Trust & Investments

Brad Honer, CFA

Fixed Income Specialists

Eric Green
Thomas Joy

Richard Underwood, CFA

Portfolio Managers

Gary Chontos, CAIA
Peter Connellan
Melissa Diaz

Marc Dobson
Brett Falkenhagen
Antonio Lau
Ronald Ross 

Equity Trader

Valerie Ross


Wilson Boren
Tyler Chapman
Sarah Dolan

Pascal Leduc
Natalie Manning
Allan Ngo

Investment Policy Committee

Dan Davidson, CFP
Mary Lynn Bronner, CFA
Gary Chontos, CAIA
Marc Dobson

James Engelbrecht
Susan Green
Bruce Hagemann
Anne-Joëlle Viguier-Galley, CFA
Marc Wenhammar

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Details you need to make a smart decision

BBVA is the trade name for BBVA USA, Member FDIC, and a member of the BBVA Group. Securities products are NOT deposits, are NOT FDIC insured, are NOT bank guaranteed, may LOSE value and are NOT insured by any federal government agency.

This material contains forward looking statements and projections. There are no guarantees that these results will be achieved.

Investing involves risk including the potential loss of principal. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

Indexes are unmanaged and investors are not able to invest directly into any index.

International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.

Investments in stocks of small companies involve additional risks. Smaller companies typically have a higher risk of failure, and are not as well established as larger blue-chip companies. Historically, smaller-company stocks have experienced a greater degree of market volatility than the overall market average.

 Equity investments tend to be volatile and do not involve the guarantees associated with holding a bond to maturity.

In general, the bond market is volatile as prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. The investor should note that vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds) involve additional risks because of the lower credit quality of the securities in the portfolio.

The investor should be aware of the possible higher level of volatility, and increased risk of default.

Municipal bond offerings are subject to availability and change in price. If sold prior to maturity, municipal bonds may be subject to market and interest risk. An issuer may default on payment of the principal or interest of a bond. Bond values will decline as interest rates rise. Depending upon the municipal bond offered, alternative minimum tax and state/local taxes could apply.

The price of commodities is subject to substantial price fluctuations of short periods of time and may be affected by unpredictable international monetary and political policies. The market for commodities is widely unregulated and concentrated investing may lead to higher price volatility.

Investments in real estate have various risks including possible lack of liquidity and devaluation based on adverse economic and regulatory changes.

Other Sources: Bloomberg; California.gov; Russell.com; First page index returns are calculated on a total return basis using the following indexes: S&P 500 (SPX), MSCI World (MXWO), MSCI Emerging Markets (MXEF), BofA Merrill Lynch U.S. Treasuries 1-10 years, BofA Merrill Lynch U.S. Agencies 1-10 years, BofA Merrill Lynch U.S. Corporates 1-10 years A-AAA, BofA Merrill Lynch U.S. Municipals 1-10 years A-AAA, Russell Top 200 Index, Russell 1000 Index, Russell Midcap Index, Russell 2500 Index, Russell 2000 Index, Credit Suisse High Yield Index (CSHY), MSCI U.S. REIT Index (RMZ Index).