ECONOMIC OUTLOOK

2019 Outlook: Don't let volatility distract clients from their goals

KEY TAKEAWAYS

U.S. perspectives: The U.S. economy is late cycle, but continues to enjoy strong momentum.
         With volatility rising and valuations elevated, selective investing will be key in 2019.    

International opportunities: The outlook for international equities remains mixed as attractive
           valuations are balanced against rising political, economic and market turmoil.

Fixed income opportunities: Rising interest rates are breathing life back into bond income
    after years of rock-bottom yields. Bonds can again offer stability to balanced portfolios.

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  • Investment implications
  • What to tell clients
  • Macro perspectives: Expect markets to continue to be unsettled as quantitative easing is removed and the Federal Reserve hikes rates. China and Europe are slowing faster than many expected, and threats of tariffs fan the uncertainty. All eyes will be on China in 2019 to offer guidance for the global economy

    Equity opportunities: Don’t expect too much from U.S. equity given the lofty valuations. Companies with large addressable markets could still provide growth, though, for investors able to find them.  

    Taxable fixed income: Paying close attention to core fixed income will be critical as the global economy is in a late cycle. Watch out for unintentional risks in your core bond strategies. Hard-hit emerging markets debt may offer opportunity for long-term investors.

  • Macro: A busy calendar of events in global trade and politics will likely continue to unnerve markets. If your portfolio is properly positioned for your long-term goals, you should see the volatility as noise, if not an opportunity if valuations fall.

    Equity: Keep your patience with international stocks even if 2019 is another rocky year for overseas markets. There are unique opportunities where companies in Europe and in emerging markets have attractive valuations, especially compared with the U.S.

    Fixed income: Remember that fixed income investments can not only offer income amid rising rates but also protection from equity volatility. Safe-haven and municipal bonds may be especially attractive if equity markets gyrate.

WEBINAR HIGHLIGHTS:

Answers to RIAs’ questions about markets in 2019

Where are major economies in the cycle?

Economist Jared Franz discusses why he thinks the U.S. economy is headed into a late-cycle phase. This shift has important ramifications for your clients’ portfolios in 2019 and beyond.

(01:18)


 

How will higher volatility change bond strategies?

Portfolio manager John Smet examines a new reality in fixed income markets. Quantitative tightening is taking control of global bond markets in distinct ways your clients will want to be prepared for.

(00:41)


 

How will China’s slowdown and trade disputes affect the globe?

Portfolio manager Rob Lovelace discusses what changes in the world’s second-largest economy will mean for global economies. He gives insight as you prepare your clients’ globally diversified portfolios for a more challenging economic climate.

(01:31)


 

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