While warnings of recession, bear markets and trade wars going into and throughout 2019 were rampant, calendar year equity returns are shaping up to be among the best since 2009. What did the market miss, and what insight might it give us for our 2020 forecast? Well, contrary to popular belief, when the market is coming to an inflection point, it is fundamentals that show the way, notprice action, which in fact often shows the wrong way.
- The New Year is approaching, riding on the heels of raging global stock and bond market rallies.
- Last year strong fundamentals ultimately led to the best broad-based market in a decade.
- 2020 is likely to begin with faltering fundamentals, including the first negative earnings growth in 12 quarters along with four consecutive months of manufacturing contraction.
- There are divergent outlooks among the “Big 3” (Europe, China and the United States); U.S. is stable, but Europe and China face serious challenges.
- U.S. Manufacturing is contracting, while the U.S. Consumer remains the game changer, a likely tailwind in 2020. Expect calm followed by storms, and remember the sequel is never as good as the original.
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