"Everyone is saying" yes, it's late cycle … but is it? ", He said.
"It's interesting where we are at a time when the market does not seem to be reacting to things that are material."
As an example, he pointed to the "remarkable" move of the US Federal Reserve on interest rates in which it went from signaling increases in interest rates to signaling cuts.
Investors were also trying to cope with a highly unpredictable geopolitical environment. Asked about how investors could handle this unpredictability, especially from US President Donald Trump, he said, "You've spread as much as possible because you have no idea where he's coming from."
Alonso said that unreasonable reactions to Trump's statements, whether positive or negative, can be partially explained by "prices in search of normality when there is less, another sign of late-cycle behavior."
PanAgora manages $ 43 billion ($ 61 billion) in assets and Alonso was in Australia launching his defensive investment strategy for a large local retirement fund. He said the strategy sought to balance risks by analyzing measures such as volatility to build a portfolio that would be neutral in a falling market.
The comments came as one of Wall Street's most skeptical advisors, Morgan Stanley's chief stock strategist Mike Wilson warned that the S & P 500 index should fall into a 10% correction in the third quarter if economic data continue to deteriorating.
While the potential for a cease-fire in the US-China trade war at the G-20 summit could increase the recent surge in Fed-dovish-backed markets, neither is enough to halt an economic slowdown, Wilson said. .
"We remain convinced that the fundamentals are getting worse than most recognize, and we do not see the Fed or G20 outcome changing that trajectory," Wilson wrote in a note to clients.
"If the Fed is cutting rates because it's really the end of the cycle, instead of the Fed simply taking out insurance against that result, it has very different implications for stock markets. Evidence is building that's more the first than the second. "
Paul Xiradis, fund manager for Australian investor Ausbil, said global markets are experiencing an "incredible period" and conceded that the local stock market "may be a bit of a bubble," but he argued that low interest rates sustained the growth.
"You'd rather be earning cash flow from companies rather than income from bonds that are yielding [negatively] in some cases around the world. Owning companies is the right place to be, so stocks are not a bad place to be, "he said.
"Maybe the world can not live in a higher interest rate environment [and the low interest rate environment] is here for a generation or more. If that's the case, actions are not a bad place to be. That's the dilemma. "
Mathew Dunckley is business editor of the Sydney Morning Herald and The Age. Based on our Melbourne essay, Mathew has almost 20 years of experience as a journalist and publisher.
Josh Dye is a reporter for The Sydney Morning Herald.