As we said goodbye to the 2010s and reflected on a decade fueled by disruption, growth and innovation – from virtual reality to lab-grown meat and everything Amazon – we couldn’t help but marvel at the object closest in the rearview mirror, 2019, as a fitting finale.
Against the backdrop of global trade wars, an unsettling political and media climate at home, and grand challenges facing government, private sector and the global society at large, the US economy still managed to have a banner year and defy most expectations. Yet as we ask in our Q1 2020 Economic Outlook, were are we headed from here? Will a “Goldilocks” economy in terms of interest rates and inflation continue to march onward, avoiding the bear market that might be lurking.
The positives: US stocks are at an all-time high, unemployment is at a historic low and consumer attitudes are positive. The negatives: A tepid US corporate earnings outlook alongside weak business confidence and manufacturing are unlikely to be boosted by either the ongoing trade deal with China or the looming November presidential election. However, on balance, knowing what we know today, we are net positive for 2020, expecting somewhat of a rebound in corporate earnings both in the US and in emerging markets.
For this reason, we are not making drastic wholesale changes to our approach, instead opting for modest portfolio adjustments and concentrating our efforts in the best ideas and opportunities for growth. Core Fixed Income, Infrastructure and Emerging Markets Equities are three areas we’re focusing on now.
If the past decade transformed how we communicate, shop and support brands that align with our values, then we will continue to evaluate both the economic fundamentals and the macro societal shifts to prepare for the decade ahead and move proactively.
Read our in-depth take in our Q1 2020 Economic Outlook (PDF download).
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