Economic snapback to fuel global growth. We have a very optimistic outlook for 2021, with above-consensus GDP calls around the globe.
Markets thus far in 2020 have been, to use an overused word, unprecedented. In a matter of months, we have witnessed economic and market moves that typically take an entire market cycle of many years to unfold. So, we truly do see 2020 as a year when investors are gaining “dog years” of experience.
Globally, there are two fundamental shifts happening in the current environment that are increasing the need for income-producing products. First, as baby boomers continue to retire from their work lives, the demand for investment income is likely to grow.
• Volatility has been the story of 2019. The markets have dealt with uncertainty around global trade restrictions, recession fears and the possibility of impeachment of President Donald Trump.
• We project these headwinds will cause global economic growth to remain relatively weak for the remainder of the year.
• We believe the likelihood of a near-term recession is unlikely and tentative signs of economic stabilization could develop in the next few months.
Volatility continues to be a key factor in the world oil market and the stocks of energy companies. We think the oil market still is at an early-recovery stage and the fundamentals of supply and demand remain solid.
U.S. stock market indices continue to reach new highs and major global economies are growing in sync for the first time in a decade. Corporate earnings have reached record levels, business confidence indicators are climbing while inflation remains in check.
The stock market continued to hit new highs through the third quarter, confounding those who focused on the rapidly changing headlines in the U.S. and throughout the world.
We think there are ample catalysts for ongoing corporate earnings growth. Growth appears to be broadening to more cyclical parts of the economy, such as manufacturing, as well as outside the U.S. The political climate – including the outcome of the remaining elections across Europe and President Donald Trump’s political agenda – is evolving. We think it will be difficult to predict Trump’s next move, but think tax reform is likely to remain on the agenda this year.
It's not unusual for a new year to bring changes. But 2017 may be particularly noteworthy. Topping the list is a new U.S. president and Republican-controlled Congress, bringing the prospect of a new direction for many policies, regulations and legislative priorities. Elections and leadership changes also are on the calendar in several major countries, including France, Germany and China. What may not change next year are the geopolitical tensions that continue to pressure several regions around the globe.