Quarterly Global Perspectives

2020 Mid-Year Outlook: The Storm Before the Calm – The Sequel

July 16, 2020

Executive Summary

  • A blockbuster quarter in equities was capped off with encouraging economic readings, but hold the fireworks!
  • Massive global monetary and fiscal stimulus led by the U.S. was much needed and hit its mark
  • The S&P 500 price is 25 times 2020 earnings compared to its historical average of 15 times
  • Corporate earnings look ominous for the balance of 2020, but optimism for next year is building
  • The pendulum has swung from low regulation to high regulation induced by COVID-19 hysteria
  • Record high deficits risk record high taxes, reducing prospective capital investment, jobs and economic growth

Blockbuster is the only way to describe the second quarter 2020. The Dow Jones Industrial Average exploded to its best quarter since 1987 and the NASDAQ had its best since the dotcom boom of 1999. The economy was no slouch either, having entered the up-side of a V-shaped recovery by capping the quarter with strong positive surprises in non-farm payrolls, ISM Manufacturing and ISM Services reports. However, while this is all quite extraordinary considering the extreme, pandemic-driven Bear market, we should hold the celebratory fireworks as both the markets and economy are fragile and remain in contraction. Indeed, some wider perspective is warranted.

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2020 Forecast The Storm before the Calm — The Sequel

December 1, 2019

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.

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3rd Quarter Update: Storm Clouds Gathering

October 1, 2019

The gathering storm clouds that first began forming across Europe, and then China are now developing over the U.S. In Europe, it seems imminent that the third quarter will signal a recession; China has its hands full with the U.S. supply chain; and the U.S. suffered a substantial negative surprise in its very important manufacturing sector.

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Midyear Update: May Showers Bring June Flowers

July 1, 2019

We unabashedly tout our 2019 theme, “The Storm before the Calm,” as it accurately unfolded in the markets in the first half. The storm in December was followed by a calm from January through April, which sent markets to near record highs.

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Markets Springing Ahead, not Springing a Leak

April 1, 2019

During the first quarter of 2019, a field of green across the board replaced the steep market declines of 4Q18. Double-digit equity returns rewarded investors in U.S. and international markets alike.

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2019 Forecast: The Storm Before the Calm

December 1, 2018

In 2019 we expect, and prudent investors should prepare for, “the storm before the calm” — tighter monetary conditions, uncertainty that includes a “disorderly Brexit” and increasing tensions between China and the United States on multiple fronts. 

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