Weekly Digest – Outlook for 2020
Following the worst year for equity markets since the financial crisis, 2019 was one of the best. Many risks failed to materialise: US-China trade wars moved towards a phase one deal, the UK did not fall over the Brexit cliff edge, the World economy slowed but did not enter recession, China’s debt bubble was contained and geopolitics caused ripples but no dislocation. Most important was the policy pivot by the Fed, from a restrictive stance to much looser policy. But corporate earnings were flat, so returns of 28% from world equities leave valuations materially higher than a year ago. Can this bull market, the longest in history, continue?