2020 Equity Market Outlook
Michael Gibbs, Director of Equity Portfolio & Technical Strategy
In 2020, we expect the trade war to simmer, the slump in the US and global manufacturing to improve, the global macro to benefit from central bank policy actions over the past year or so, while corporate profits will re-accelerate to the upside. All of the above paint a positive picture for the US and global equities. Despite our positive bias, we warn the path to equity gains will not be devoid of typical periods of volatility, with global manufacturing only appearing to stabilize as opposed to recover at this writing. Also, set-backs with trade remain a possibility with adherence to final terms of the phase I trade deal necessary. After the nearly 30% 2019 gain for US stocks, valuation, with a PE over 19x trailing 12-month earnings, leaves little room for valuation expansion. For this reason, the expected resumption in earnings per share growth is paramount to our theme.
