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Blackrock: the good years of 2020 are fleeting

Last year made ten after seven expected cash prizes, Wall Street legend, blackstone group (56.74, 0.84, 1.50%), vice President of private wealth solutions department byron Wayne 35 years in a row released its latest annual list of “accidental”, referring to himself to the global economic situation and the fed’s policy, the situation in the Middle East, trade negotiations, the us election, the British to back European and movements of stock of debt, and hot hot issues such as industry and company may appear surprises. Instead of the average investor putting the odds at one in three, byron puts the odds at more than 50 per cent.

2019 is a thing of the past. While the strange combination of a weak economy, rising trade friction and tight monetary policy led to losses across almost every asset class in 2018, the opposite is true in 2019. Monetary stimulus, economic stability and uncertainty, but ultimately successful in reducing geopolitical risk, led to a glorious year for risky assets

This year isn’t likely to repeat the glory of 2019, but I don’t think it will return to the challenges of 2018. Looking ahead to 2020, here are three New Year’s predictions:

  1. No recession, no boom.

Although fears of a recession were exaggerated at the end of 2018, the global economy does face some problems. Today, two of the biggest problems have been addressed: the shift from tight to loose monetary policy and a temporary “trade truce” between the us and China. These two factors, together with strong U.S. consumption and modest Chinese stimulus, should sustain global growth. That said, we are not on the cusp of the economic nirvana of the 1990s. Long-term headwinds that impede economic growth, especially in an aging society, will not disappear as we head into the New Year. Demographic changes will still limit the growth rate of the Labour force, keeping us gross domestic product at about 2 per cent.

  1. Interest rate ranges fluctuate.

Modest growth has kept inflation in check, while the fed has sat tight, suggesting that interest rates are range-bound. Recent comments from the fed confirm that it is likely to hold fire in 2020. That would keep the short end of the yield curve near current levels. In the longer term, low and stable inflation and economic recovery are likely to put modest upward pressure on interest rates. However, with economic growth still tepid and demand for long-term debt outstripping supply, 10-year Treasury yields are likely to remain in the near-term range of 1.50 per cent to 2.25 per cent.

  1. The stock market is unpredictable. Profit is early.

Although the stock market had a big drop in 2019, it didn’t last as long as many thought. Since peaking in early 2018, the MSCI All Country World Index (ACWI) is up about 2%. Globally, valuations seem reasonable, and equities should continue to benefit from the delayed effects of monetary stimulus in 2019. Stocks have done well in 2019, but I don’t expect the luck to return. More challenging for investors may be how the gains for the whole of 2020 will be distributed. December’s momentum should continue into January, but gains could become more elusive since then. If a short, brutal and bad U.S. election cycle continues, stocks could remain range-bound for much of the spring and summer. In other words, January’s gain could be too much for all of 2020.

Base case: while the market is unlikely to be profitable next year, the bull market should continue.

One caveat: the best part of the year may end before groundhog day (February 2).

Ford Austin

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