IN B R I E F
• The U.S. economy should slow but not stall in 2019
due to
fading fiscal stimulus, higher interest rates and a
lack of workers. Even as unemployment falls
further, inflation should be relatively contained.
• Central banks in the U.S. and abroad will tighten
monetary policy in 2019 – this should continue to
push yields higher. In the later stages of this cycle,
investors may want to adopt a more conservative
stance in their fixed income portfolios.
• Higher rates should limit multiple expansion,
leaving earnings as the main driver of U.S. equity
returns. With earnings growth set to slow, and
volatility expected to rise, investors may want to
focus on sectors that have historically derived a
greater share of their total return from dividends.
• After a sharp fall in valuations in 2018, steady
economic growth and less dollar strength may
provide international equities some room to
rebound in 2019. However, the climb will be
bumpy and investors should ask themselves, in
the short run, whether they have the right
exposure within different regions and, in the long
run, whether their exposure to international
equities overall
is adequate.
• There are significant risks to the outlook for 2019.
The Federal Reserve may tighten too much; profit
margins may come under pressure sooner than
anticipated; trade tensions may escalate or
diminish; and geopolitical strife may force oil
prices higher.
• Timeless investing principles are especially
relevant for investors in what appears to be the
later stages of a market cycle. Investors may wish
to tilt towards quality in portfolios along with an
emphasis on diversification and rebalancing given
higher levels
of uncertainty.
• The U.S. economy should slow but not stall in 2019
due to
fading fiscal stimulus, higher interest rates and a
lack of workers. Even as unemployment falls
further, inflation should be relatively contained.
• Central banks in the U.S. and abroad will tighten
monetary policy in 2019 – this should continue to
push yields higher. In the later stages of this cycle,
investors may want to adopt a more conservative
stance in their fixed income portfolios.
• Higher rates should limit multiple expansion,
leaving earnings as the main driver of U.S. equity
returns. With earnings growth set to slow, and
volatility expected to rise, investors may want to
focus on sectors that have historically derived a
greater share of their total return from dividends.
• After a sharp fall in valuations in 2018, steady
economic growth and less dollar strength may
provide international equities some room to
rebound in 2019. However, the climb will be
bumpy and investors should ask themselves, in
the short run, whether they have the right
exposure within different regions and, in the long
run, whether their exposure to international
equities overall
is adequate.
• There are significant risks to the outlook for 2019.
The Federal Reserve may tighten too much; profit
margins may come under pressure sooner than
anticipated; trade tensions may escalate or
diminish; and geopolitical strife may force oil
prices higher.
• Timeless investing principles are especially
relevant for investors in what appears to be the
later stages of a market cycle. Investors may wish
to tilt towards quality in portfolios along with an
emphasis on diversification and rebalancing given
higher levels
of uncertainty.
0 Comments