2019 Midyear Outlook
Kiplinger recently noted that the U.S. stock market appeared more resilient than ever, having bounced back from a devastating end of 2018. Employment remains relatively steady, inflation flat and the Fed has indicated reticence to increasing interest rates through the end of the year. In fact, the only headwinds for the rest of the year appear to be manmade, such as the ongoing tariff wars on multiple fronts.1
Kiplinger’s outlook for the rest of 2019 continues to be rosy for the income market, including bonds, preferred stocks, real estate investment trusts and master limited partnerships. For investors concerned that trade negotiations may create too much volatility for their portfolios, there are income alternatives that offer the opportunity for healthy returns to help ride out this tide.2
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In its midyear review, Citibank also expressed apprehension due to the “renewed threat of trade protectionism.” However, its investment analysts recommend keeping portfolios fully invested but also building an asset strategy that can weather turbulence. This suggests a diversified mix of higher quality, global fixed income securities, alternative investments, and equities with earnings and dividends that are less likely to be impacted by import tariffs.3
Merrill Lynch maintains a positive outlook for global markets with a particular eye toward the sporting goods sector. Market analysts assert that many global brand leaders are poised to widely infiltrate Asian markets on the strength of top-ranked Japanese, Korean and Chinese female athletes in tennis, golf and basketball.4
The analysts at Lord Abbett believe that the municipal bond market offers ongoing opportunities in light of the reduced threat for interest rate changes. The biggest investor flows have been into high-yield muni-bond funds, where the investment team believes there is still a lot of value. Overall, the money manager remains bullish on the equity market and sees value in the tax-free bond market.5
Morgan Stanley is a bit more bearish in its outlook for the rest of the year. The wealth manager notes that the S&P 500 is experiencing single-digit earnings growth; the yield curve is flat; small caps and cyclicals are underperforming; and recent trade escalations are likely to cast a long shadow on the second half of the year. On a positive note, the growth gap between the U.S. and the rest of the world is widening. Morgan Stanley sees opportunities in Europe and China, where fiscal policy is expected to ease and create a strong environment for manufacturing.6
Content prepared by Kara Stefan Communications.
1 Anne Kates Smith. Kiplinger. June 6, 2019. “2019 Midyear Investing Outlook: Where to Put Your Money Now.” https://www.kiplinger.com/article/investing/T052-C000-S002-kiplinger-s-2019-midyear-investing-outlook.html. Accessed June 11, 2019.
2 Jeffery R. Kosnett. Kiplinger. June 5, 2019. “2019 Midyear Outlook for Income Investing.” https://www.kiplinger.com/article/investing/T052-C003-S002-2019-midyear-outlook-for-income-investing.html.
Accessed June 11, 2019.
3 David Bailin. Citibank. “Stronger portfolios for turbulent times.” https://www.privatebank.citibank.com/ivc/docs/Mid-Year-Outlook-2019.pdf. Accessed June 11, 2019.
4 Merrill Lynch. June 3, 2019. “Capital Market Outlook.” Accessed June 11, 2019.
5 Lord Abbett. May 20, 2019. “Midyear Outlook, Part 2: Exploring Opportunities in Select Asset Classes.” https://www.lordabbett.com/en/perspectives/marketview/2019-midyear-outlook-opportunities-asset-classes.html. Accessed June 11, 2019.
6 Morgan Stanley. June 5, 2019. “2019 Mid-year Strategy Outlook For Investors.” https://www.morganstanley.com/ideas/midyear-2019-global-markets-outlook. Accessed June 11, 2019.
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