Slower Growth and Market Returns in 2019

By Brent Puff - January 10, 2019

As we head into 2019, equity markets are pricing in a decidedly pessimistic outlook with regards to the global economy and the pace of growth in corporate profits.

The market’s pessimism is a by-product of the following factors:

  1. Weaker economic activity, which has thus far been focused in non-U.S. geographies, particularly in Europe and China.
  2. Escalating trade tension between the U.S. and its key trading partners, particularly China.
  3. Concern that the U.S. Federal Reserve’s monetary tightening path is too aggressive, given the deterioration in forward growth expectations.
  4. The economic cycle is extended.

While we acknowledge the pace of growth is likely to slow in 2019, we do not believe recession is lurking around the corner. We also believe that the abrupt and broad-based sell-off in equity markets has created opportunities to invest in great companies at attractive valuations that are likely to continue to be successful, even as the overall pace of growth moderates.

In my latest video, I outline these issues in more detail and discuss why we believe the market’s fears might be overblown.

Transcript

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