Snapshot

Markets in 2020: The stabilisers remain on


With a presidential election in the US in 2020, inevitably political news will continue to dominate the headlines.

However, from a market standpoint, investors will be much more focused on corporate earnings and interest rates. On this front there is some room for optimism.

Normally at this stage of the cycle, and we are at the late stages of economic expansion in the US, we would be worried about recession risk.

But we think the risk of recession has come down. The imbalances that usually cause a recession are absent.

At the same time the easing of trade tensions and the very loose monetary policy are both supportive of corporate activity.

We are overweight equities and quite positive in those markets. However, I don’t think we should party like it is 1999.

Global growth is still anaemic, trade has to recover much more strongly for us to be cyclically exposed and there is a risk that higher wage costs could eat into US profit margins.

So, we still like government bonds as a hedge against global growth disappointment.

All in all, we are positive on equities but with some stabilisers.

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Registered Office at 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped and monitored. 

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