Market Outlook January 2019

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THE ECONOMY

  • U.S. will set a record for longest economic period of growth in July 2019. Not entering a recession though probability rising. Household net worth is at an all time high. Household debt service ratio at 35 year lows. Unemployment at 40 year lows. Wages rising. Though corporate balance sheets worsening.
  • U.S. growth, after growing close to 3% in 2018, will grow near 2.25% in 2019, very near post crises average. Administration’s regulatory roll back and tax reform are long term positives. Tariff spat negative, but potential to be positive if result improves trade fairness with China.  Divided or dysfunctional government negative with shutdown/debt ceiling and other financial issues pending.
  • Global economic growth forecast growth at 3.9% for 2019/20 – largest contributors to growth are China, U.S., India and ASEAN5.
  • Major risks continue to be policy driven – either monetary, fiscal or trade based – especially as global central banks continue to try to manage asset prices and indebted government balance sheets. Overleveraged nations, including U.S., China, Japan and Europe. Credit stress, bond market dislocations caused by globally high levels of indebtedness.

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AK Global Market Research
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