When Vicious Cycle Flips to Virtuous Cycle

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We have seen a vicious cycle of bad news, from slowing growth to nascent inverted yields curves topped with another failed Brexit plan. This has held back the equity market after its initial burst out of the gates in 2019. But is it over for the year? Is it time to sell and lock in gains? Absolutely not. There are too many good things happening that tend to get missed by the sensationalist media. For instance, U.S. GDP is at all-time record highs; as are S&P 500 corporate earnings, U.S. retail sales and U.S. industrial production.

The global economy is also powering along; it has actually more than doubled the annual $38 trillion of GDP since 2003, and stood at $84 trillion in 2018. If a few items tilted in favor of the market — such as a solid China-U.S. trade deal or even a federal funds rate cut by the end of 2019 — they could create a virtuous cycle. We believe this bull market still has legs and possible upside surprises.

Please read the Global Perspectives 2019 outlook, “The Storm before the Calm.”

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