29 Oct Midyear Outlook 2019
WHEN WE RELEASED our Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets in December 2018, financial markets were in disarray. Global investors were scared by uncertain monetary policy, fiscal and legislative discord, slowing economic growth, and slackening corporate profits. Despite the increased volatility, we continued to believe that market and economic fundamentals remained generally sound.
Fortunately, the worst of these fears did not materialize, and consistent with our Outlook, the U.S. economy avoided a recession, global equities rebounded, and fixed income returns contributed to diversified portfolios. Economic and market fundamentals were the foundation for the market’s recovery from the December lows. Even as we face prospects for periodic volatility, we believe emphasizing fundamentals remains critical for making effective investment decisions.
At the halfway point of 2019, the U.S. economy has held steady, supported by the fiscal stimulus we have highlighted for two years, and corporate profits continue to grow. At the same time, trade tensions are increasingly weighing on the economic outlook, while slowing global growth and political uncertainty have forced global central bankers to extend extraordinary levels of support. We are still navigating a challenging environment. Investing comes with uncertainty, and market volatility can be alarming, but we continue to encourage investors to look beyond short-term market stresses and consider the real drivers of investment returns, as we believe that mindset may be a key to achieving long-term financial goals.
Our Midyear Outlook 2019 provides our updated views of current fundamentals and the things that should persist as shorter-term concerns fade, and emphasizes our four primary pillars for fundamental investing—policy, the economy, fixed income, and equities. As the headlines change daily, look to these pillars and LPL Research’s Midyear Outlook 2019 to help provide perspective on what really matters in the markets.