What might 2020 hold for glob­al finan­cial mar­kets?  Broad­ly, more of the same … Volatil­i­ty.

 

The past year has expe­ri­enced sig­nif­i­cant insta­bil­i­ty for the finan­cial mar­kets.  Decem­ber 2018 saw stocks sell off sig­nif­i­cant­ly only to rebound through April and then sell off again in May.   Mar­kets trad­ed side­ways through the fall only to break­out in Octo­ber and Novem­ber due to a Fed rate cut and increased hopes of a China‑U.S. trade deal being done.  We expect more of the same for finan­cial mar­kets in 2020.

The U.S. is bet­ter suit­ed to han­dle the glob­al slow­down.  The unem­ploy­ment rate is at his­tor­i­cal lows and wages are ris­ing, albeit slow­ly.  Con­sumer spend­ing makes up about 70% of U.S. GDP and they con­tin­ue to spend.  U.S. growth will trend around 1%, like­ly avoid­ing a tech­ni­cal reces­sion (i.e. two suc­ces­sive quar­ters of eco­nom­ic con­trac­tion).  On the oth­er hand, the Euro zone economies will con­tin­ue to slow and waf­fle in and out of reces­sion.  The main caus­es are the impact of tar­iffs on indus­tri­al trade, polit­i­cal pol­i­cy uncer­tain­ty (i.e. Brex­it, nation­al­ism, etc.) and mon­e­tary pol­i­cy deci­sions (i.e. neg­a­tive inter­est rates).  China’s econ­o­my, along with oth­er emerg­ing mar­ket economies, will con­tin­ue to slow as well – a direct result of the glob­al trade spate and the impact that it is hav­ing on the devel­oped world economies.

 

And let us not for­get, the upcom­ing 2020 U.S. gen­er­al elec­tion is upon us.  The pup­peteers of cam­paign mar­ket­ing are fever­ish­ly gear­ing up to once again obfus­cate the vot­ing pub­lic.  The elec­tion is less than a year away – Tues­day, Novem­ber 3rd, 2020 is the offi­cial date – make sure you mark your cal­en­dars now.

Until then, pre­pare for anoth­er volatile year in the finan­cial mar­kets.