Stifel Market Sight Lines

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AdvisorHub Readers …

Please enjoy SightLines by our Chief Investment Officer, Michael O’Keeffe, CFA.

Read why he believes the negative stories of 2018 can turn positive in 2019!

Also, please visit our new ChooseStifel.com site to get a glimpse of why so many of your colleagues have joined, and are joining, Stifel!

A YEAR OF RESOLUTIONS

I was asked recently for my opinion on what will be the most important stories in 2019. In an instant, my mind was clear on the topic – the most important stories in 2019 will be positive resolutions to the negative stories that drove investor fear in 2018.

2018 in Context

The S&P 500 index posted a total return of -4.4% in 2018, its first down year since 2008. Putting this in context, the cumulative return of the S&P 500 index from 2009 to 2017 was 259%. The 2018 return represents a modest retreat comparatively. As we look we look forward, we remain positive on the economy and the stock market as we anticipate resolutions in 2019.

BREXIT

The U.K.’s exit from the European Union (EU) is scheduled to occur on March 29, and, true to the form of U.K. politics, the process to final U.K. parliamentary approval has been contentious. Prime Minister Theresa May survived a December no-confidence vote, and the U.K. Parliament’s vote was delayed to January. The first vote may fail. Parties may need to compromise.

But we expect compromise and resolution…with Brexit occurring with an agreement.

U.S.-China Trade

Throughout 2018 we read about U.S.-China trade tensions and tariffs, both threatened and real. Each party seemed unwilling to negotiate, choosing instead to volley threats back and forth through social media and public statements. Market participants dislike such public exchanges. Then President Trump and President Xi held a dinner meeting on December 1, establishing a framework and timetable to negotiate a new trade agreement. And we’ve seen progress since then, with interim concessions and positive statements from both sides. Might there be more tensions and tariff threats? Perhaps.

But we expect compromise and resolution…with a new U.S. and China trade agreement. (continued)

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