Almost Everything Wall Street Expects in 2020

Aberdeen Standard Investments

Amid global economic stagnation and rising political uncertainty in a low-yield world, investors should look beyond the comfort of conventional asset classes with a cautious, diversified approach for better risk-adjusted returns.

Amundi Asset Management

Instead of fearing a global recession, investors should focus on adjusting the portfolio exposure to the de-globalization trend. They should also prepare for a mature and extended credit cycle, with higher liquidity risks due to more stringent regulations post-2008 crisis.

Bank of America

The trade war remains at the core of our macro forecasts, while of course, 2020 U.S. elections approach. We are moderately optimistic, as reflected by our expectations for higher U.S. yields and a softer dollar in both G10 and EM.

Barclays

We expect a tepid recovery to uninspiring trend growth, but with diminished economic and policy risks. In light of the very low returns on offer in core bond markets, we think this sets the stage for a grind higher in risk assets.

Barclays

We believe that there is a strong case to expect positive, if modest, returns in major asset classes.

BlackRock Investment Institute

Growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in U.S.-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.

BlackRock Investment Institute

Our base case is for a mild pickup supported by easy financial conditions, with a slight rise in U.S. inflation pressures. We see China’s economy stabilizing, but little appetite for replays of the large-scale stimulus of the past. We see the growth uptick taking root in the first half of the year, led by global manufacturing activity and rate-sensitive sectors such as housing.

BMO Capital Markets

Our baseline assumption is that the economic damage triggered by the trade war will continue spreading to the broader economy (cap ex, inventories, international trade, and real estate) and result in a mild technical downturn defined by as little as two consecutive quarters of negative real GDP growth; certainly nothing as dramatic as the financial crisis.

BNP Paribas Asset Management

“Fragile goldilocks” holds—stabilizing data, loose central bank policy, short-term de-globalization dynamics supporting risky assets.

Capital Economics

We think that returns from “risky” assets – equities, corporate bonds, REITs and industrial commodities – will generally beat those from “safe” ones – government bonds and precious metals – again over the next two years, as the global economy finds its feet. However, in our view both will be weaker than in 2019.

Capital Economics

Our proprietary models show the risks of a U.S. recession are receding and we expect the drop in market interest rates this year to underpin a gradual cyclical recovery in 2020 and beyond.

Citi

Risks may still be tilted to the downside, but we are not forecasting a global (or U.S.) recession in 2020. Citi’s economists think that global growth will settle in around 2.7% year-on-year in both 2020 and 2021 as global manufacturing activity rebounds.

Columbia Threadneedle

Our base case is that there is unlikely to be an acceleration in growth and we are equally unlikely to see a deep recession. In that environment, the long-duration element of markets – be that in fixed income or equities – remains relatively attractive.

Deutsche Bank Wealth Management

History suggests that years of sharp gains (as in 2019) are not usually followed by falls, but often instead by more modest growth - so 2020 should still be worth approaching in a positive spirit.

Eastspring Investments

An extended global growth cycle: The U.S. will enjoy its longest post-war expansion and a recession is not our base case. Fiscal policy will likely matter more than monetary.

Fidelity International

The world will avoid a global recession in 2020. The earnings outlook is improving, but U.S. election risk remains high.

Goldman Sachs

Risky assets benefited from central bank easing in 2019, but now growth will need to drive returns. We expect moderately better economic and earnings growth, and therefore decent risky asset returns. But we also see plenty of risks, and more challenging valuations, so the upside is limited.

Hermes Investment Management

We actually see 2020 as rich in opportunities, years in which there are super normal (more than one standard deviation above mean) returns in fixed income are almost always followed by meaningfully positive years and we expect 2020 to be similar.

HSBC

Our baseline scenario for 2020 is relatively favorable. We anticipate slow and steady growth, low inflation, accommodative policy and single digit profit growth. In our view, a recession seems like more of an issue for 2021, or even beyond.

JPMorgan Chase & Co.

Looking into 2020, we believe that the positive drivers will continue, at least for the first half. Some negatives could start dominating later on, making 2020 a proverbial year of two halves.

JPMorgan Chase & Co.

Returns to be generally worse than 2019, which delivered above-average gains on all sectors but Commodities and EM FX. The spectrum of total return projections runs from single-digit losses on DM bonds and commodities to low single-digit gains on much of credit (U.S./euro HG, EM sovereigns) to mid-to-high single digits on EM corporates and U.S. HY.

Lombard Odier Investment Managers

We see a potential catch-22 situation arising in 2020 as policy, economic and political dilemmas loop between each other, and create a more complicated investment landscape.

Lombard Odier Investment Managers

Our base case assumes a shallow trajectory of global growth in 2020. We do not see a V-shaped recovery in global capex/business investment, despite the likely confirmation of a phase one trade deal between the U.S. and China. We see the risk of recession and a hard landing as moderate (less than 20%) over the coming 12 months, and note that the likelihood of such risks has fallen lately.

Macquarie Global Macro

We expect a modest but broad-based economic recovery, which should in turn support a material improvement in global risk appetite, with equities, yields and industrial commodities all moving higher, as fears of recession fade. In this world, the dollar would be likely to gradually deflate, supporting the expected EM recovery.

Morgan Stanley

2020 will be about an uneven global recovery colliding with uneven valuations. Sequencing the cycle is our key theme for the year ahead. This strategy means being more aggressive in better-valued markets with early-cycle upside and more defensive in pricey markets that have less room to run.

Morgan Stanley

Easier monetary policy and trade stabilization will help global growth accelerate, but only stabilize GDP growth in the U.S. at 1.8%, leaving pressure on corporate margins from tight labor markets.

NatWest Markets

We prefer growth over monetary assets: Central banks will be more reluctant to ease. Fiscal policy will partly fill the void.

Nordea Asset Management

We expect the economic slowdown to spread till the first half of 2020 before China leads a moderate economic rebound that should slowly extend into 2021.

Northern Trust

We are moderately overweight risk going into 2020 as the global economy is showing signs of stabilization after an episode of mid-year weakness.

Pictet Wealth Management

Accommodative monetary policies and tepid fiscal policies will help contain further worries over politics and trade and prop up growth to some extent. In these circumstances, 2020 is likely to see low returns across the main asset classes.

PineBridge Investments

Unwinding 2019’s flight to safety will unfold in stair steps throughout 2020, boosting cyclical equities, European and Japanese small caps, and emerging market local currency debt. In a sea of pessimism, it pays to lean portfolios constructively.

Principal Global Investors

We don’t foresee a recession in the next 12 months, so there is no reason to take risk off the table. Yet, investors will increasingly need to be nimble and actively seek out opportunities, whilst also retaining a largely defensive positioning, in this low return, high risk world.

RBC Wealth Management

Central banks’ accommodative monetary policies, as well as some additional fiscal stimulus, will keep most developed economies growing through 2020 and probably longer. This should engender growth in corporate earnings, dividends and buybacks. Share prices should follow all these higher.

Robeco

We expect the economic expansion to last a little longer, and the equity bull market to enter the last leg of a near decade-long climb.

Robert W. Baird & Co.

We note that our base case (mid-single-digit gains for the S&P 500 in 2020) falls well within the range of outcomes being expressed by strategists at other firms. From our perspective, the distribution of risks at this point suggests slightly more likelihood that the deviation will be to the downside than to the upside.

Schroders

Bond yields and economic growth are likely to remain subdued in 2020, with equities remaining relatively attractive.

State Street Global Advisors

We believe that the global economic recovery will continue in 2020, although it may have to sidestep substantial risks to sustain momentum. Those risks notwithstanding, renewed monetary policy support and resilience in consumer spending and services should help to propel the cycle forward.

TD Securities

The first half of 2020 will repeat many of the themes from 2019: further central bank easing and disappointing growth in some regions, with inflation struggling to reach target across most major economies. By mid-year, looser financial conditions and gradually fading uncertainty should mark an inflection point, with global growth slowly returning to trend over the following quarters.

UBS

We expect a recovery in 2020 but a much weaker one than consensus.

Unigestion

Our proprietary Nowcasters still indicate a low probability of economic contraction in the short run. Our core scenario for next year remains one of tepid yet positive economic expansion, with minimal risk of inflationary or central bank surprises. They should stay quiet at least for the first half of the year, assessing the impacts of the latest round of accommodation on the real economy.

Unigestion

There will be less to expect from carry and beta on a global scale. The need to be selective will be more important and we believe this year’s laggards could play a strong role in achieving positive returns in 2020.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Vanguard

Vanguard’s global market outlook suggests a somewhat more challenging environment ahead. Based on simulated ranges of portfolio returns and volatility, the diversification benefits of global fixed income and global equity remain compelling.

Wells Fargo Investment Institute

In 2020, investors should stay fully invested, but take targeted risk out of their portfolios.

Wells Fargo Securities

If our assessment is right – i.e., much of the juice has been squeezed from the capital markets – stock returns will be more modest with higher volatility and by definition stocks have a less attractive risk/reward.

Aberdeen Standard Investments

Secular stagnation with low growth, weak inflation and low interest rates is likely to define global economy for the next five years. Going into 2020, rising policy and political uncertainty will continue to weigh on industrial, trade and investment activities. We have downgraded our global GDP growth forecasts for 2020 and 2021 to 3.1%, well below the post-crisis average. A recession could be avoided next year but the risks have clearly increased.

Amundi Asset Management

The retreat in global trade is a major change to the structure of growth but will not lead to a full-blown recession, especially at a time when cumulative loose policies will gear up and a partial deal between the U.S. and China is in sight.

AXA Investment Managers

For 2020 we think actual GDP growth is unlikely to be able to exceed potential in the key economic regions. Too much damage has been done, old headwinds are still with us and new sources of uncertainty have emerged.

AXA Investment Managers

Where there is scope for some upward revision to growth, e.g. Germany and China in an improved global manufacturing scenario, or the UK post a soft-Brexit deal, we could see an improvement in relative equity market performance.

AXA Investment Managers

Growth should re-assert its dominance over value in a modest economic growth scenario with low interest rates. Cyclicals are still very cheap relative to bond-like defensives and some further valuation adjustment could take place.

AXA Investment Managers

Cautious optimism on global growth may finally be the catalyst for some dollar weakness in 2020. This may not benefit the euro, as carry still matters a lot to investors. We believe the Canadian dollar is a better ‘upside’ choice than the Australian dollar, and the Japanese yen a better safe-haven than the Swiss franc.

AXA Investment Managers

The duration pendulum should swing in favor of high yield in 2020, barring a bad downturn in growth.

AXA Investment Managers

2019 has been a very tough year for Turkey, Brazil and Mexico. A mechanical rebound is likely, especially since a more accommodative monetary policy in the developed world will ease external financial pressure on these economies.

AXA Investment Managers

We think the FOMC will be forced to ease further at the end of 2020 when it realises that overcapacities are rising again, but this would be more reactive than pre-emptive, and even if the Fed goes “all the way” the quantum of support should not be overstated.

Barclays

Fewer downside risks do not imply upside growth surprises; a measured boost to business investment is the best case, even in the event that trade tensions disappear completely.

Barclays

The U.S. recovery is long in the tooth, the euro area still faces structural growth issues, and we do not expect material new fiscal help in either economy in 2020. Most important, China does not seem likely to repeat the quasi-fiscal stimulus that it undertook in 2015-16, which set the stage for a global rebound in 2017. We expect global growth to be slightly stronger in 2020 than in 2019, but much weaker than in 2017-18.

Barclays

Our bias for carry is also reflected in our emerging-market views, where the macro backdrop seems unusually favorable for EM fixed income. A bottoming of global growth without a strong cyclical rebound means EM investors should have few growth worries, while also avoiding the double whammy of higher core rates and a much stronger dollar.

Barclays

We expect a tepid recovery to uninspiring trend growth, but with diminished economic and policy risks. In light of the very low returns on offer in core bond markets, we think this sets the stage for a grind higher in risk assets.

Barclays

The outlook for equities is a bit more promising. Although equities do not look cheap, there remains room for them to become more expensive in an environment of punishingly low returns on core fixed income. We also think some improvement in the economic outlook sets the stage for modest growth in corporate earnings. These are weak drivers of equity market performance compared with the early stages of an economic recovery. But with fixed income as unappetizing as it is, no very strong driver is required to generate outperformance by equities; a trend-like expansion is likely to do the trick.

Barclays

Peripheral European sovereign spreads have widened over the past month, but we see this as an opportunity. A fragile political situation in Spain, disappointing growth in Portugal and planned strikes in France could all push sovereign spreads a little wider, but for investors with a three-month or longer horizon, we recommend European peripheral sovereign spreads.

BlackRock Investment Institute

Income streams are crucial in a slow growth, low-rate world. We like EM and high-yield debt.

BlackRock Investment Institute

We see any fiscal support from China as limited and not delivering the countercyclical boost it has in the past. A material escalation in U.S.-China trade tensions could shift China’s fiscal policy stance. But our base case is that tensions move sideways and do not escalate.

BlackRock Investment Institute

Growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in U.S.-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.

BlackRock Investment Institute

Our base case is for a mild pickup supported by easy financial conditions, with a slight rise in U.S. inflation pressures. We see China’s economy stabilizing, but little appetite for replays of the large-scale stimulus of the past. We see the growth uptick taking root in the first half of the year, led by global manufacturing activity and rate-sensitive sectors such as housing.

BlackRock Investment Institute

The main risk to our outlook is a gradual change in the macro regime. One such risk: Growth flatlines as inflation rises. This might pressure the negative correlation between stock and bond returns over time, reducing the diversification properties of bonds.

BlackRock Investment Institute

We see room for many EM central banks to ease, supporting EM growth. This underpins our overweights in EM debt, particularly local-currency, and in high yield.

BlackRock Investment Institute

Risks are are tilted downward for growth because any renewed escalation of trade tensions could derail the growth uptick we expect. Inflation, by contrast, could surprise to the upside, particularly in the U.S.

BMO Capital Markets

Our baseline assumption is that the economic damage triggered by the trade war will continue spreading to the broader economy (cap ex, inventories, international trade, and real estate) and result in a mild technical downturn defined by as little as two consecutive quarters of negative real GDP growth; certainly nothing as dramatic as the financial crisis.

BNP Paribas Asset Management

Global growth converging toward trend. Slowdown to persist in 2020. U.S. growth should outperform Europe and Japan.

BNP Paribas Asset Management

“Fragile goldilocks” holds—stabilizing data, loose central bank policy, short-term de-globalization dynamics supporting risky assets.

BNP Paribas Asset Management

Our base case is vulnerable to a more entrenched “synchronised slowdown” or a sustained “reflation” environment. Fixed income markets are most at risk from sustained move to reflation.

BNY Mellon

Stimulus could be a catalyst for a normalization in term premium. A bear steepening will be a concern amid improving global activity.

BNY Mellon

Historically low currency volatility has vexed FX investors for the past few years. Yield curve flattening and rates compression, as well as stable long-term fundamentals have conspired to reduce FX spot ranges. For FX volatility to pick up in 2020, we would need to see meaningful policy or real economic divergence.

Capital Economics

Despite recent progress on trade talks between the U.S. and China, we think that most of their differences will remain unresolved. And the recovery in global GDP growth is likely to be lacklustre, with China missing out.

Capital Economics

We project that the returns from risky commodities in 2020-21 will be similar to those from equities. However, this has more to do with tight supply than a brighter outlook for growth.

Capital Economics

Industrial metals will fare a bit better, in both absolute and relative terms, in 2020-21 – even as China’s economy loses momentum – given the prospects for supply. In particular, we think that copper will benefit from stronger demand from the renewable energy and electric vehicle sectors, while little new supply comes online.

Capital Economics

We expect growth in the global economy to remain subdued, particularly outside the U.S. And tensions between the U.S. and China are likely to persist, despite the latest progress towards a limited trade deal. Both of those developments would probably be positive for the dollar relative to most other major currencies.

Capital Economics

Euro-zone growth is likely to be far weaker than the consensus assumes next year, as industry stays in the doldrums, the services slowdown gathers pace and fiscal policy is of little help.

Capital Economics

Slow euro-zone growth will keep core inflation stuck close to 1% in the coming years. We expect the ECB to change its inflation target in the coming months and to cut its deposit rate by a further 30 basis points during 2020, which is more than markets expect. We also think that it will step up its QE from 20 billion euros to 30 billion euros per month in mid-2020, by buying more corporate bonds.

Capital Economics

We think that weak domestic and foreign demand will cause Japanese GDP to fall outright next year. Given mounting concerns over the impact of loose monetary policy on financial stability, we disagree with the consensus view that a further reduction in interest rates is to come and expect the Bank of Japan to leave its policy rate unchanged.

Capital Economics

The strength of Chinese construction activity will not be sustained. Further policy loosening is likely, with the PBOC in particular acting more aggressively than markets envisage. But this will do no more than help struggling sectors to stabilize. We expect China’s growth to slow from around 5.2% this year to 4.5% next, which is worse than generally anticipated.

Capital Economics

We think that returns from “risky” assets – equities, corporate bonds, REITs and industrial commodities – will generally beat those from “safe” ones – government bonds and precious metals – again over the next two years, as the global economy finds its feet. However, in our view both will be weaker than in 2019.

Capital Economics

With the euro-zone economy likely to struggle next year, and no meaningful fiscal loosening on the horizon, we think that the ECB will surprise markets with at least some additional easing.

Capital Economics

Even in the U.S., where the economic outlook seems relatively bright, we expect actual and expected inflation to stabilize, rather than rebound.

Capital Economics

Our proprietary models show the risks of a U.S. recession are receding and we expect the drop in market interest rates this year to underpin a gradual cyclical recovery in 2020 and beyond.

Capital Economics

The risk of the U.K. trading with the EU on WTO rules after December 2020 would limit the size of the rebound in GDP growth and the pound.

Citi

Risks may still be tilted to the downside, but we are not forecasting a global (or U.S.) recession in 2020. Citi’s economists think that global growth will settle in around 2.7% year-on-year in both 2020 and 2021 as global manufacturing activity rebounds.

Citi

Leading economic indicators like the brief inversion of the yield curve and some tightening in credit conditions for commercial and industrial firms point to the potential for some economic weakness in the second half of 2020. Combined with concerns about a potential change in tax policy and tighter business regulation should the White House flip, this could lead to some market volatility in the back half of 2020.

Columbia Threadneedle

We believe global economic expansion will continue at a slower, less even pace across regions.

Columbia Threadneedle

Geopolitics continues to unnerve investors as trade wars and Brexit rumble on against the backdrop of a late-cycle economy, but secular growth trends will provide long-term opportunity regardless of whether we see slight positive or negative growth.

Columbia Threadneedle

There is inherently more growth in emerging markets than in other places over the long term, and the growing middle classes in Asia (especially India) remain key, but regionally we favor the U.S., for the sheer number of companies that have the potential for growth. This makes it a difficult market to be underweight in.

Columbia Threadneedle

Our base case is that there is unlikely to be an acceleration in growth and we are equally unlikely to see a deep recession. In that environment, the long-duration element of markets – be that in fixed income or equities – remains relatively attractive.

Columbia Threadneedle

More generally, a risk to the upside could come in the shape of a sudden acceleration in growth. Some believe this is likely because costs to businesses are currently low, with interest or borrowing rates low, as well as commodity and specifically oil prices. Also, the trade disputes could dissipate, while governments may increase or prolong fiscal stimulus.

Credit Suisse

Economic data has decelerated over the past 1+ years, resulting in the outperformance of Low Vol and Growth stocks, at the expense of Value. This leadership shifted more recently, on aggressive Fed action and improving economics. Our work indicates that this rotation will continue through the early part of 2020. Absent a “V” shaped bounce in the data, we expect this rotation to fade as we move further into next year. We are upgrading more economically-sensitive groups including Financials, Industrials, Materials, and Energy. We are downgrading more defensive sectors including Staples, Utilities, REITs, and Communications. Our overweight on Technology and Discretionary remains unchanged.

Deutsche Bank Wealth Management

A sense of continued policy uncertainty, combined with growth fears, high valuations for equities and lackluster earnings growth will tend to boost volatility.

Deutsche Bank Wealth Management

We expect slower global economic growth in 2020 and think that there is only a limited probability of a U.S. recession. U.S. growth is forecast to slow from an estimated 2.2% in 2019 to 1.6% in 2020 and euro zone growth from 1.1% to 0.9%. China will continue to experience a soft landing, with growth slowing to 5.8% in 2020 – but much will depend on finding a more comprehensive solution to the ongoing U.S./China trade dispute.

Deutsche Bank Wealth Management

Within developed market corporate bonds, we see opportunities in U.S. Investment Grade and the euro zone crossover segment (i.e. lower-rated investment grade, higher-rated high yield). The likelihood of slower growth keeps us more cautious on high yield in general. With the ECB being a large buyer again, the hunt for yield will continue and even lower-rated European bonds will trade on negative yields. Against this background, remember too that U.S. Treasuries still appeal as a source of positive nominal yields.

Deutsche Bank Wealth Management

Mild yuan depreciation could be caused by China’s continuing macro slowdown and accompany any possible future setbacks in U.S./China trade talks.

Deutsche Bank Wealth Management

Slowing economic growth argues against outright commodity exposure but the case for real assets plus a likely moderation in dollar strength points to opportunities in gold. History suggests that a rising U.S. budget deficit can be associated with upward pressure on the gold price. Our end-2020 forecast for the gold price is $1,550 per ounce.

Deutsche Bank Wealth Management

Oil prices cannot resist the downward pressure from slowing global economic growth which will most likely have implications for demand, but political spats will cause temporary upward blips during the course of the year. Our end-2020 forecast for WTI is $54 per barrel.

Eastspring Investments

U.S. outperfromance will continue to moderate. If this in turn tempers dollar strength, it could unlock the valuation opportunities in EM and Asian assets.

Eastspring Investments

An extended global growth cycle: The U.S. will enjoy its longest post-war expansion and a recession is not our base case. Fiscal policy will likely matter more than monetary.

Evercore ISI

Economic volatility will remain low, and U.S. GDP growth around 2% as long as savings rates remain high, labor market demand strong, and consumer confidence firm.

Evercore ISI

The outlook for growth and risk assets has improved. Global economic activity, though still stuck in low gear, has started to firm. Earnings growth is set to re-accelerate. Global central banks remain dedicated to reaching their still elusive inflation targets, in part by maintaining asset-friendly financial conditions.

Fidelity International

If growth begins to recover in 2020, there could be a shift back to the value and cyclical stocks that have previously been overlooked. Banks are the exception. The pricing of their raw material - namely interest rates - will remain extremely low and perhaps go even more negative.

Fidelity International

As central banks run out of ammunition to stimulate growth, we expect attention to shift to fiscal policy. We are probably underestimating the fiscal room for maneuver in China and the U.S., while central bankers in Japan and Europe are both telling their states to spend more.

Fidelity International

In 2019, central banks returned to synchronized policy easing for the first time since the financial crisis. We believe this will continue in 2020 as central banks deploy whatever tools they can to stimulate growth and avoid a full-blown recession. With core bond yields likely to remain low - 10- year Treasuries below 2% - we expect further inflows into areas of fixed income that offer more attractive yields. Yields in defensive investment grade are already tight, so we expect investors to diversify into higher-yielding areas such as emerging market debt.

Fidelity International

The key risk for 2020 is that central bank policy fails to generate growth, governments shrink from fiscal stimulus and the global economy plunges into recession.

Goldman Sachs

Markets have recently priced out a number of tail risks (related to Brexit, the trade war, and other geopolitical threats), but have not yet priced in sturdier global growth. As economic activity finds its footing, we see upside in a variety of cyclically sensitive assets, including emerging-market equities and breakeven inflation in the bond market, and expect cyclical sectors to outperform in equities and credit. Risky assets will, in our view, produce decent returns for the year as a whole across regions.

Goldman Sachs

We are not expecting the type of go-go global growth environment that would sink the dollar or result in a major bear market for bonds.

Goldman Sachs

With the Fed on hold and inflation unlikely to take off, we would discourage positioning for a major bear market in U.S. rates next year, even with somewhat better growth.

Goldman Sachs

Normally the Dollar weakens when global growth turns up and risk appetite improves. But we think solid U.S. growth and soft activity in China will prevent a big sell-off for now. Sterling should gain more ground as investors cover long-standing underweights.

Goldman Sachs

EM (ex-China) growth, inflation will bounce off lows, but output gaps remain. We expect positive returns for EM assets under baseline scenarios with a relatively better environment for EM equities and equity-centric exposures in EM currencies. 2019 will still be a year for navigating around potholes; hedges will be key.

Goldman Sachs

Risky assets benefited from central bank easing in 2019, but now growth will need to drive returns. We expect moderately better economic and earnings growth, and therefore decent risky asset returns. But we also see plenty of risks, and more challenging valuations, so the upside is limited.

Hermes Investment Management

Political fragility, protectionism, cost-inflation, and dissipating growth suggest renewed volatility.

HSBC

Investors should be careful not to confuse data “troughing” with “recovering.”

HSBC

Growth is most likely to be a story of muddling through. In short, whenever we reach either of these two extremes, investors should still “sell-the-rally” or “buy-the-dip.”

HSBC

Downside risks such as a global growth recession look more remote at this point, but prevailing uncertainty limits the upside that we can expect from our strategy.

HSBC

Our baseline scenario for 2020 is relatively favorable. We anticipate slow and steady growth, low inflation, accommodative policy and single digit profit growth. In our view, a recession seems like more of an issue for 2021, or even beyond.

JPMorgan Asset Management

The economic map for 2020 is far from clear. The early months of the year may see a small reprieve in manufacturing activity, but overall global growth is likely to remain constrained by geopolitical uncertainty.

JPMorgan Chase & Co.

The market turmoil and economic slowdown over the past 18 months is not marking the end of the business cycle, but rather represents a reset similar to crises that occurred every three years after 2008 (2011/2012, 2015/2016, and 2018/2019).

JPMorgan Chase & Co.

In 2020, the global economy is expected to grow at 2.5%, with Asia leading at 4.3%.

JPMorgan Chase & Co.

We continue to believe that U.S. recession is unlikely over the next quarters, and that the manufacturing activity downturn witnessed over the past 18 months is likely to end, partly helped by the trade truce. PMIs are expected to rebound and the positive impact from recent Fed cuts is likely to filter into the economy in the first half.

JPMorgan Chase & Co.

Global growth to return to above-trend, characterized by fading U.S. outperformance, a European step-up and stable Mainland China. The Fed should ease again, as will several EM central banks.

JPMorgan Chase & Co.

In U.S. HG credit, the team forecasts tighter 2020 year-end spreads at 125 basis points. Drivers include the global search for positive yielding assets, rapidly declining net issuance of HG bond and a positive fundamental backdrop of slow but steady U.S. growth and supportive monetary policy.

JPMorgan Chase & Co.

In U.S. HY credit spreads are projected to tighten to 440 basis points by year-end 2020 given expectations for an extension of the current muted economic cycle matched with only a limited rise in Treasury yields.

JPMorgan Chase & Co.

In EM, the bar for a strong risk rally in 2020 is high given the late cycle backdrop and the team has currently only tactically positioned for a bounce in near-term activity indicators with a small overweight in EM FX.

JPMorgan Chase & Co.

The BCOM Index will probably decline nearly 6% through year-end. The third-wave manufacturing bounce in the global macro economy next year should deliver some lift in cyclical commodities in early 2020 but it will more closely resemble the relatively constrained economic environment of 2012 as constrained Chinese growth and idiosyncratic supply factors will likely prevent a repeat of 2016 reflationary bull market across commodities. In oil, Brent is expected to decline next year and to reach $55.60 per barrel in the fourth quarter, 2020. In precious metals, similarly to 2016, a backdrop of growth uplift alongside a Fed explicitly on hold should be inherently positive, but not uber-bullish.

JPMorgan Chase & Co.

As the monetary stimulus acts with a lag, we believe that a cyclical upswing will more decisively manifest itself in 2020.

JPMorgan Chase & Co.

EM equities have done poorly in the last two years, even worse than the U.K., and are currently languishing at relative lows. We think that this creates a good entry point, and upgrade EM to overweight, funded by reducing U.S. weight further. Potential USD peaking would help, EM are likely to benefit from a turn in global PMIs, from trade truce and from some likely pickup in China dataflow.

Lombard Odier Investment Managers

We see a potential catch-22 situation arising in 2020 as policy, economic and political dilemmas loop between each other, and create a more complicated investment landscape.

Lombard Odier Investment Managers

Our base case assumes a shallow trajectory of global growth in 2020. We do not see a V-shaped recovery in global capex/business investment, despite the likely confirmation of a phase one trade deal between the U.S. and China. We see the risk of recession and a hard landing as moderate (less than 20%) over the coming 12 months, and note that the likelihood of such risks has fallen lately.

Lombard Odier Investment Managers

We expect real rates to remain low and the search for yield to strengthen as a major structural theme because meaningful fiscal easing remains elusive, especially in Europe. We expect additional monetary policy easing from the European Central Bank, whilst the Federal Reserve may have to cut again in the second half. We also expect further accommodation from China as growth remains under pressure against the backdrop of financial stability concerns.

Macquarie Global Macro

Given that global growth is currently approaching stall speed, a further escalation of trade tension could see recession talk return to center stage.

Macquarie Global Macro

While we expect a 2020 economic rebound, we do not expect a repeat of the sharp recovery seen over 2016 and 2017.

Macquarie Global Macro

Looking further out, as the economic recovery gathers steam we expect equities to continue to rally. A growth recovery should support the commodities complex.

Macquarie Global Macro

We expect a modest but broad-based economic recovery, which should in turn support a material improvement in global risk appetite, with equities, yields and industrial commodities all moving higher, as fears of recession fade. In this world, the dollar would be likely to gradually deflate, supporting the expected EM recovery.

Macquarie Global Macro

The dollar will gradually deflate over the course of 2020 as U.S.-China trade tensions moderate, hard Brexit risks diminish, and global growth picks up. Towards the end of 2020, escalating U.S. political risk could deal a more severe blow, but we need to get much closer to the Presidential election before the FX consequences are felt.

Morgan Stanley

Strategists continue to be bullish on Japan, which they have called the most under-recognized turnaround story in global equity markets. While growth in Japan remains challenged according to the firm’s economists, compelling valuations and improving returns on equity could add up to 9% upside for the benchmark Topix.

Morgan Stanley

The team has raised its stance on EM equities from underweight to equal weight on a a better ex-U.S. global growth outlook.

Morgan Stanley

2020 will be about an uneven global recovery colliding with uneven valuations. Sequencing the cycle is our key theme for the year ahead. This strategy means being more aggressive in better-valued markets with early-cycle upside and more defensive in pricey markets that have less room to run.

Morgan Stanley

In the U.S., fundamentals will ultimately dictate market outcomes in 2020. Rather than hitch their wagons to the index, investors should watch for rotations between styles and sectors. We expect the market to vacillate between a pro-cyclical outcome and a defensive one as data comes in and trade tensions and elections evolve. In either case, we think growth stocks could be the relative loser as the crowded source of funds.

Morgan Stanley

Easier monetary policy and trade stabilization will help global growth accelerate, but only stabilize GDP growth in the U.S. at 1.8%, leaving pressure on corporate margins from tight labor markets.

NatWest Markets

European growth should outperform very bearish consensus, in part because Germany delivers a sizable fiscal stimulus. Political risks are receding. ECB may deliver one last 10 basis-point cut.

NatWest Markets

We are not bullish on global growth in 2020. Our forecast for global GDP growth in 2019-20 is 2.4%, which would be the deepest and most persistent period of weakness since the start of the expansion. Recession is a real possibility, but certainly not our base case.

NatWest Markets

We prefer growth over monetary assets: Central banks will be more reluctant to ease. Fiscal policy will partly fill the void.

Nordea Asset Management

We expect the contagion from low corporate and consumer confidence to spread and consumer savings to rise as this deleterious story takes hold though a U.S.-China trade deal in the first quarter 2020 should help to reverse the situation.

Nordea Asset Management

EM fixed income should benefit from Fed easing (though not everywhere) while EM and European equities (e.g. Sweden) should be a good place to position for an eventual rebound in China and then the U.S.

Nordea Asset Management

We expect the economic slowdown to spread till the first half of 2020 before China leads a moderate economic rebound that should slowly extend into 2021.

Nordea Asset Management

We expect a rapid economic rebound and by mid-2021, when the Fed should be on a path of tightening once again. The pace of tightening should be slow under Democrats as we will likely be in a fiscal contraction given pressure from Republicans to rein in spending.

Northern Trust

We are moderately overweight risk going into 2020 as the global economy is showing signs of stabilization after an episode of mid-year weakness.

Northern Trust

2020 will be another year of slow growth, durable enough to avoid recession but disappointing to those looking for improvement. The U.S. looks set to accomplish its 12th straight year of expansion. The slow pace of the expansion has extended its duration. We also expect the main European and Asian economies to expand in 2020.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Northern Trust

The combination of slow growth and technological innovation will continue to suppress inflation, bolstering the global central bank easing cycle underway. This leaves us continuing to favor lower risk risk assets, such as high yield bonds. We also remain constructive on the outlook for interest rates, leading to recommended overweights in global real estate and global listed infrastructure

Oxford Economics

The U.S. economy isn’t about to fall off a cliff. As we peek into the next decade, we believe a soft landing is possible with gently easing employment trends, more cautious business investment, slowing consumer spending momentum and ongoing support from the Federal Reserve. Sub-potential, but not recessionary economy: growth at 1.6%.

Oxford Economics

Elevated U.S. recession odds at 35% as economy nears stall speed.

Pictet Wealth Management

The dollar is likely to weaken in 2020, given a decline in the growth and rate differentials that have played in its favor up to recently.

Pictet Wealth Management

We think moderation in global growth and elevated political and economic uncertainty will support defensive currencies like the yen and Swiss franc as well as gold.

Pictet Wealth Management

Accommodative monetary policies and tepid fiscal policies will help contain further worries over politics and trade and prop up growth to some extent. In these circumstances, 2020 is likely to see low returns across the main asset classes.

Pictet Wealth Management

We do not expect an imminent recession if policy support keeps economies on an even keel – and we favor those countries undertaking fiscal stimulus.

PineBridge Investments

The end of this expansion’s third mini-slowdown and rebound in global PMI’s should lead to a greater rebound in cash flows than in GDP, like the prior two mini-slowdowns.

PineBridge Investments

In currencies, the flight to liquidity (in the form of dollars) and safety (Swiss francs and yen) emanating from the “slowdown but likely not recession” backdrop, should reverse in 2020.

PineBridge Investments

The FANGs and healthcare stocks face rising political risks, and just as they appeared immune to global economic slowing, they are unlikely to benefit much from any reacceleration. We see this large segment of global equities yielding leadership to large-cap U.S. cyclicals, value stocks, and non-U.S. equities. We are fans of stocks in Dr. KOSPI (the South Korea Composite Stock Price Index), India, Brazil, as well as Japanese and European small caps.

Principal Global Investors

Global growth appears to be stabilizing and should start a shallow recovery in the first quarter of 2020, while global investor sentiment is being supported by expectations for a likely reprieve in trade tensions, setting the scene for a more constructive year for emerging markets.

Principal Global Investors

A U.S./China trade resolution, even just a partial deal which stops further tariffs, will reinforce the wealth of China’s stimulus measures introduced over the past year, stabilizing the economy and thereby lifting the emerging Asia region.

RBC Wealth Management

Although U.S. economic growth could slow in 2020, so long as this does not derail the broad economic expansion narrative, the dollar should remain supported, in our view.

RBC Wealth Management

Central banks’ accommodative monetary policies, as well as some additional fiscal stimulus, will keep most developed economies growing through 2020 and probably longer. This should engender growth in corporate earnings, dividends and buybacks. Share prices should follow all these higher.

RBC Wealth Management

Despite turbulent intraday swings in 2020, RBC Capital Markets expects WTI crude oil to trade between $50 and $60 per barrel over the next 12-18 months, capped by excess global supply and slowing demand growth. U.S.-China trade uncertainty and a further deceleration in global manufacturing would impede any significant rally in copper. Gold to consolidate as less monetary easing.

Robeco

We expect the economic expansion to last a little longer, and the equity bull market to enter the last leg of a near decade-long climb.

Robeco

The U.S. economy is unlikely to slip into a recession next year as employment, consumer spending and services remain resilient. We expect the ISM manufacturing index to recover along the way.

Robeco

With 2020’s slow start, U.S. GDP growth will be lower (<2%) than in 2019.

Robeco

Based on expected global GDP growth, company earnings, and the relative value of equities compared to other assets, there is definitely a case for a prolonged period of tailwind for investors.

Robeco

We expect stock markets to reach new highs before struggling later. Equities tend to move up until very close to a recession, and improved economic growth should translate into renewed earnings growth. DM and EM stocks are expected to outperform other asset classes.

Robeco

Government bond yields should grind higher as economic conditions improve, with central banks unwilling or unable to ease more. That said, we do not expect an end to extremely low or negative yields any time soon.

Robeco

Should the U.S. economy avoid recession but growth remain sluggish, selected BBB and BB EM local government bonds should fare well. But in a more pronounced recovery scenario, we see three opportunities: global inflation-linked bonds, selected cyclical currencies and Eurozone periphery bonds.

Robeco

We expect Trump to remain U.S. president after the elections because the incumbent party tends to win whenever the economy is improving. We acknowledge, however, that the way to that victory is likely to be volatile.

Robeco

The yield curve has inverted, but based on historical data including lag times, a recession is more likely after 2020. Other recession indicators like building permits and initial jobless claims are not flashing red either.

Robert W. Baird & Co.

With domestic valuations stretched and global growth stabilizing, renewed opportunities for and benefits from diversification are emerging.

Robert W. Baird & Co.

Decelerating economy may provide a growth scare, but recession risk in U.S. remains low.

Schroders

Our view on emerging markets has become more optimistic following an improvement in manufacturing surveys.

Schroders

We expect both global growth and the U.S. 10-year Treasury yield to remain well below 3% in the coming year.

Schroders

We are still more worried about growth disappointing than we are about inflation picking up. As a result, we still believe that government bonds are a potentially attractive hedge for multi-asset investors.

Schroders

The absence of a more emphatic global recovery prevents us from significantly rotating our investments. Low cash rates suppress economic and financial volatility and compel us to stay invested. We continue to tread a careful line between benefiting from the liquidity environment without exposing ourselves to too much economic risk.

Schroders

We expect an acceleration in economic growth for emerging markets (EM) in 2020.

Schroders

Bond yields and economic growth are likely to remain subdued in 2020, with equities remaining relatively attractive.

Schroders

Political risk is likely to remain a feature of the market environment, particularly in a world where growth is scarce and unequally distributed. A re-intensification of the trade war is the most significant risk as this could lead global growth to fall below 2%.

Schroders

We expect a loosening of fiscal policy in the U.K. But fiscal stimulus is waning in the U.S. and the political will for significant fiscal easing in Germany seems to be absent. Overall, we put a low probability on there being a major expansion of fiscal policy globally in 2020.

Societe Generale

Our economic team still forecasts a short and shallow recession in the U.S. by the summer, which clearly prevents us from being optimistic on equities. However, our economists now see fewer downside risks to their scenario, which leaves the door open to a balanced allocation (45% equities, 45% bonds) with a high degree of volatility control.

Standard Chartered

China’s economy should find some stability from reduced trade tensions with the U.S., but deflation risks remain due to the weakness in PPI.

Standard Chartered

We believe the dollar strength of previous years will continue to weigh on U.S. corporate profits, leaving the U.S. consumer vulnerable to corporate cost-cutting and job cuts.

Standard Chartered

We are bullish on EM flows through H1-2020, as (1) major central banks are likely to expand their balance sheets to support economic growth, and (2) global growth is slowing but not at risk of recession. EM debt and equities have seen selective foreign buying in Q4 so far, and this trend is likely to continue in H1-2020.

State Street Global Advisors

In light of our overall growth forecast, we continue to favor select risk assets. Our emphasis on the selection of risk assets is deliberate; although we believe global GDP growth will come in close to long-term averages, there are considerable regional and sector disparities.

State Street Global Advisors

We believe U.S. economic outperformance will continue, although the outperformance gap between the U.S. and other regions may start to shrink. Europe continues to lag due to cyclical and structural problems, but a catalyst could trigger improvement, especially in the second half of 2020. EM will be critical contributors to global growth; that said, we expect economic performance in EM to be highly variable.

State Street Global Advisors

We believe that the global economic recovery will continue in 2020, although it may have to sidestep substantial risks to sustain momentum. Those risks notwithstanding, renewed monetary policy support and resilience in consumer spending and services should help to propel the cycle forward.

State Street Global Advisors

Stimulative central bank activity should reap benefits, including keeping GDP growth near its potential. The result should be a favorable backdrop for corporate issuers, who should see fairly stable ratings. Corporate bond holders across the spectrum (investment grade through high yield) will see additional benefit through improved market technicals: Issuance is trending lower and ECB purchases will drive prices up

State Street Global Advisors

The possibility of a less favorable economic outcome remains a risk. Therefore, in 2020 we favor more defensive positioning in our overweight to credit: shifting away from cyclical areas such as autos and retail, and favoring staples such as telecommunications. Similarly, we think it will be wise to be judicious with allocations to lower-grade credit.

TD Securities

The broad dollar isn’t ready to turn yet, but global growth dynamics and some reduction in uncertainty should help valuations, that suggest an expensive dollar, take hold.

TD Securities

The first half of 2020 will repeat many of the themes from 2019: further central bank easing and disappointing growth in some regions, with inflation struggling to reach target across most major economies. By mid-year, looser financial conditions and gradually fading uncertainty should mark an inflection point, with global growth slowly returning to trend over the following quarters.

UBS

The UBS Cycle Clock tells us that it’s past beta time. The market cycle is close to an all-time high while the business and financial cycles are middling. We dig deep to find alpha.

UBS

Relative growth is starting to weigh on the dollar, and an improving global outlook in the second half should leave it modestly weaker by end-2020. We will be tracking purchases of foreign securities by U.S. investors to corroborate our view.

UBS

The upside risk is that just as 2017’s strength was exaggerated, 2019’s tariff hit could have been similarly made worse by a perfect storm of falling car demand, a weak tech cycle, soft shale production and tight financial conditions in China and India. Some of these factors may organically improve and lift global growth towards trend.

UBS

We expect a recovery in 2020 but a much weaker one than consensus.

UBS

Policy makers who are willing (ECB, BOJ) have been less able to lift nominal growth, while those who are able (China, Germany) are not willing to loosen strongly. Risk premia may uncoil.

Unigestion

In 2020, we expect little in terms of further spread tightening and that is why we believe that 2019 returns will be hard to repeat. In most segments, if compression is only half the amount of this year, it will pull credit spreads down to unprecedented levels. In the most optimistic case, which would require a stronger macro context than currently expected, returns will, at best, be positive but much smaller.

Unigestion

Our proprietary Nowcasters still indicate a low probability of economic contraction in the short run. Our core scenario for next year remains one of tepid yet positive economic expansion, with minimal risk of inflationary or central bank surprises. They should stay quiet at least for the first half of the year, assessing the impacts of the latest round of accommodation on the real economy.

Unigestion

To start the year, our preference remains for growth-related assets and, more specifically, emerging market, European and Japanese equities, which have room to perform as investors seek cheaper regions now that political headwinds have eased.

Vanguard

In the U.K., Vanguard sees growth of 1.2% next year, assuming the country secures an orderly withdrawal deal In the euro zone, growth is likely to remain weak at around 1% in 2020, due to the trade environment, and the drag from Brexit. U.S. growth is forecast to decelerate to around 1% in 2020, avoiding a technical recession but below normal trend growth of 2%. China too is expected to slow to a below-trend pace of 5.8% in 2020 – beneath its own 6% target. The picture for emerging markets is mixed.

Vanguard

Upon factoring in lower expectations for global growth, inflation, and interest rates, the annualized return for the U.S. equity market over the next 10 years is in the 3.5%-5.5% range.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Wells Fargo Investment Institute

We remain comfortable that the expansion can again weather this storm, even while traditional late-cycle signals abound.

Wells Fargo Investment Institute

Wells Fargo Securities Economics Group forecasts slowing economic growth and low inflation for the U.S. and the largest international economies. Global growth may show little improvement in 2020.

Wells Fargo Investment Institute

We expect slow but positive global economic growth to be the prevailing factor influencing real assets in 2020, and therefore suspect that commodities will be neutral performers.

Wells Fargo Investment Institute

Hedge fund strategies that have the potential to profit in both up and down markets may provide a good alternative late in the economic expansion. Over the next few years, we favor Equity Hedge strategies.

Wells Fargo Investment Institute

We believe U.S. elections, the strategic conflict with China, and the degree of moderation in the U.S./global economic growth outlook will be the biggest drivers for markets in 2020.

Wells Fargo Investment Institute

The risk of a sharp move in the U.S. dollar or in global economic growth remains uncommonly elevated.

Wells Fargo Securities

History and fundamentals suggests aggressive multiple expansion or EPS growth is not in the works for a melt-up and the economy isn’t bad enough to signal melt-down.

Aberdeen Standard Investments

Secular stagnation with low growth, weak inflation and low interest rates is likely to define global economy for the next five years. Going into 2020, rising policy and political uncertainty will continue to weigh on industrial, trade and investment activities. We have downgraded our global GDP growth forecasts for 2020 and 2021 to 3.1%, well below the post-crisis average. A recession could be avoided next year but the risks have clearly increased.

Amundi Asset Management

Beyond the short term, the trend is toward a more aggressive policy mix that could potentially include unorthodox measures if the risk of recession intensifies. The result will be an extension of the credit cycle that could eventually end in an explosion, although it is unlikely to happen in 2020.

Amundi Asset Management

If, as we believe, the global recession will be averted, the outlook for commodities remains benign. Gold will continue to be seen as a powerful hedge against geopolitical risks.

Amundi Asset Management

The retreat in global trade is a major change to the structure of growth but will not lead to a full-blown recession, especially at a time when cumulative loose policies will gear up and a partial deal between the U.S. and China is in sight.

Amundi Asset Management

Instead of fearing a global recession, investors should focus on adjusting the portfolio exposure to the de-globalization trend. They should also prepare for a mature and extended credit cycle, with higher liquidity risks due to more stringent regulations post-2008 crisis.

AXA Investment Managers

For 2020 we think actual GDP growth is unlikely to be able to exceed potential in the key economic regions. Too much damage has been done, old headwinds are still with us and new sources of uncertainty have emerged.

BMO Capital Markets

Our baseline assumption is that the economic damage triggered by the trade war will continue spreading to the broader economy (cap ex, inventories, international trade, and real estate) and result in a mild technical downturn defined by as little as two consecutive quarters of negative real GDP growth; certainly nothing as dramatic as the financial crisis.

Capital Economics

Our proprietary models show the risks of a U.S. recession are receding and we expect the drop in market interest rates this year to underpin a gradual cyclical recovery in 2020 and beyond.

Citi

Risks may still be tilted to the downside, but we are not forecasting a global (or U.S.) recession in 2020. Citi’s economists think that global growth will settle in around 2.7% year-on-year in both 2020 and 2021 as global manufacturing activity rebounds.

Deutsche Bank Wealth Management

We expect slower global economic growth in 2020 and think that there is only a limited probability of a U.S. recession. U.S. growth is forecast to slow from an estimated 2.2% in 2019 to 1.6% in 2020 and euro zone growth from 1.1% to 0.9%. China will continue to experience a soft landing, with growth slowing to 5.8% in 2020 – but much will depend on finding a more comprehensive solution to the ongoing U.S./China trade dispute.

Fidelity International

The world will avoid a global recession in 2020. The earnings outlook is improving, but U.S. election risk remains high.

Fidelity International

In 2019, central banks returned to synchronized policy easing for the first time since the financial crisis. We believe this will continue in 2020 as central banks deploy whatever tools they can to stimulate growth and avoid a full-blown recession. With core bond yields likely to remain low - 10- year Treasuries below 2% - we expect further inflows into areas of fixed income that offer more attractive yields. Yields in defensive investment grade are already tight, so we expect investors to diversify into higher-yielding areas such as emerging market debt.

Fidelity International

The key risk for 2020 is that central bank policy fails to generate growth, governments shrink from fiscal stimulus and the global economy plunges into recession.

HSBC

Our baseline scenario for 2020 is relatively favorable. We anticipate slow and steady growth, low inflation, accommodative policy and single digit profit growth. In our view, a recession seems like more of an issue for 2021, or even beyond.

HSBC

Downside risks such as a global growth recession look more remote at this point, but prevailing uncertainty limits the upside that we can expect from our strategy.

JPMorgan Chase & Co.

Potential concerns: The U.S. politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. The Fed’s credibility might start to be questioned, earnings are overshooting the trend and rising credit concerns could come to the fore. We have consistently argued that one should not expect the next U.S. recession ahead of the presidential elections, but the odds of one might go up significantly post the event, in our view.

Lombard Odier Investment Managers

Our base case assumes a shallow trajectory of global growth in 2020. We do not see a V-shaped recovery in global capex/business investment, despite the likely confirmation of a phase one trade deal between the U.S. and China. We see the risk of recession and a hard landing as moderate (less than 20%) over the coming 12 months, and note that the likelihood of such risks has fallen lately.

Macquarie Global Macro

We expect a modest but broad-based economic recovery, which should in turn support a material improvement in global risk appetite, with equities, yields and industrial commodities all moving higher, as fears of recession fade. In this world, the dollar would be likely to gradually deflate, supporting the expected EM recovery.

Macquarie Global Macro

Given that global growth is currently approaching stall speed, a further escalation of trade tension could see recession talk return to center stage.

Macquarie Global Macro

The biggest risk remains an escalation of the trade war. With business investment already falling in most major economies, any increase in tariffs could see business “shut up shop” ahead of the U.S. election, resulting in a significant downturn/recession in the second half of 2020.

NatWest Markets

We are not bullish on global growth in 2020. Our forecast for global GDP growth in 2019-20 is 2.4%, which would be the deepest and most persistent period of weakness since the start of the expansion. Recession is a real possibility, but certainly not our base case.

Northern Trust

2020 will be another year of slow growth, durable enough to avoid recession but disappointing to those looking for improvement. The U.S. looks set to accomplish its 12th straight year of expansion. The slow pace of the expansion has extended its duration. We also expect the main European and Asian economies to expand in 2020.

Oxford Economics

Elevated U.S. recession odds at 35% as economy nears stall speed.

Oxford Economics

Our baseline doesn’t feature a recession in the near future, but the lingering industrial slump is increasingly at risk of spilling over into the broader economy. In our recession scenario, increased trade protectionism, weakening corporate earnings and declining private sector confidence lead to a prolonged industrial slump and force consumers and businesses to retrench. Real GDP contracts in mid-2020, led by a 4% pullback in investment and a 15% tumble in U.S. stock prices.

Oxford Economics

The U.S. economy isn’t about to fall off a cliff. As we peek into the next decade, we believe a soft landing is possible with gently easing employment trends, more cautious business investment, slowing consumer spending momentum and ongoing support from the Federal Reserve. Sub-potential, but not recessionary economy: growth at 1.6%.

Pictet Wealth Management

We do not expect an imminent recession if policy support keeps economies on an even keel – and we favor those countries undertaking fiscal stimulus.

Principal Global Investors

We don’t foresee a recession in the next 12 months, so there is no reason to take risk off the table. Yet, investors will increasingly need to be nimble and actively seek out opportunities, whilst also retaining a largely defensive positioning, in this low return, high risk world.

RBC Wealth Management

We have a constructive outlook for stocks for 2020. As long as U.S. recession risks remain in the distance, as they are now, we believe portfolios should maintain a Market Weight allocation to equities.

RBC Wealth Management

With some recessionary indicators flashing caution, RBC Wealth Management’s house view has become less tolerant of portfolios carrying an overweight or above target commitment to stocks. Investors should not be complacent.

Robeco

The yield curve has inverted, but based on historical data including lag times, a recession is more likely after 2020. Other recession indicators like building permits and initial jobless claims are not flashing red either.

Robeco

The U.S. economy is unlikely to slip into a recession next year as employment, consumer spending and services remain resilient. We expect the ISM manufacturing index to recover along the way.

Robeco

We expect stock markets to reach new highs before struggling later. Equities tend to move up until very close to a recession, and improved economic growth should translate into renewed earnings growth. DM and EM stocks are expected to outperform other asset classes.

Robeco

Should the U.S. economy avoid recession but growth remain sluggish, selected BBB and BB EM local government bonds should fare well. But in a more pronounced recovery scenario, we see three opportunities: global inflation-linked bonds, selected cyclical currencies and Eurozone periphery bonds.

Robert W. Baird & Co.

Decelerating economy may provide a growth scare, but recession risk in U.S. remains low.

Societe Generale

Our economic team still forecasts a short and shallow recession in the U.S. by the summer, which clearly prevents us from being optimistic on equities. However, our economists now see fewer downside risks to their scenario, which leaves the door open to a balanced allocation (45% equities, 45% bonds) with a high degree of volatility control.

Societe Generale

We expect equities to experience a 10%-15% drawdown between the second and third quarters, in line with the mild cyclical slowdown in the U.S., before ending the year just slightly lower than today thanks to a V-shaped recovery in the fourth quarter in anticipation of a better 2021.

Societe Generale

We continue to recommend staying away from small caps as a hedge against the U.S. slowdown.

Unigestion

Our proprietary Nowcasters still indicate a low probability of economic contraction in the short run. Our core scenario for next year remains one of tepid yet positive economic expansion, with minimal risk of inflationary or central bank surprises. They should stay quiet at least for the first half of the year, assessing the impacts of the latest round of accommodation on the real economy.

Vanguard

In the U.K., Vanguard sees growth of 1.2% next year, assuming the country secures an orderly withdrawal deal In the euro zone, growth is likely to remain weak at around 1% in 2020, due to the trade environment, and the drag from Brexit. U.S. growth is forecast to decelerate to around 1% in 2020, avoiding a technical recession but below normal trend growth of 2%. China too is expected to slow to a below-trend pace of 5.8% in 2020 – beneath its own 6% target. The picture for emerging markets is mixed.

Wells Fargo Investment Institute

The U.S. and other developed markets may avoid a recession in 2020. However, financial markets may only see modest upside as geopolitical risks linger and monetary policy approaches the end of its effectiveness.

Aberdeen Standard Investments

Significant monetary easing by central banks should support growth at low but positive levels. We expect the U.S. Federal Reserve’s last rate cut in this mini-cycle to come in the first half of 2020, and the European Central Bank to take further steps. We also expect further action by central banks in Australia, Canada, Brazil, China, India and Russia in the coming months, and more fiscal stimulus next year as politicians look again at their tax and spending programmes. Such measures should help cushion any market shocks.

Amundi Asset Management

Monetary and fiscal combination, a theme that will become prominent next year and beyond, may extend the cycle further, and may as well strengthen the resilient domestic demand. While the noise on trade-related issues will be high, a material escalation, which could damage the U.S. economy, is unlikely, given the upcoming U.S. elections in 2020.

Amundi Asset Management

The hunt for yield will remain a key theme, in the era of ultralow interest rates (not necessary negative) and central banks restoring some sort of quantitative easing or even going beyond it. However, crowded areas and liquidity risk persist and require a deep dive into credit opportunities (both in developed and emerging space). High yield will remain attractive, amid a benign default outlook. However, having an adequate time horizon in mind would be important, even more now that a possible mismatch between scarce market liquidity and fund daily liquidity is striking. From a company perspective, increased scrutiny at sector and security level will also be key to avoid unsustainable business models, just kept alive by investors’ appetite for yield.

Amundi Asset Management

In an environment of monetary and fiscal accommodation, EM bonds are attractive, with a preference for the hard currency, and with opportunities opening up in local currencies through the year.

Amundi Asset Management

We maintain our preference for U.S. Treasuries duration vs. other developed markets, on better absolute and relative valuations and the Fed having more leeway at its disposal on conventional tools.

Amundi Asset Management

U.S. corporate bonds are supported by favorable technicals, though not to the same extent as euro IG, as CSPP and negative rates are a European peculiarity. However, given lingering macro uncertainties, we prefer to keep a cautious attitude on credit risk, favouring high quality carry and increasing the focus on liquidity assessment.

Amundi Asset Management

We remain constructive on the main peripheral European countries (Spain and Italy), fueled by ECB action, a new political coalition in Italy and the ongoing search for yield. Curves are expected to flatten.

Amundi Asset Management

Beyond the short term, the trend is toward a more aggressive policy mix that could potentially include unorthodox measures if the risk of recession intensifies. The result will be an extension of the credit cycle that could eventually end in an explosion, although it is unlikely to happen in 2020.

AXA Investment Managers

2019 has been a very tough year for Turkey, Brazil and Mexico. A mechanical rebound is likely, especially since a more accommodative monetary policy in the developed world will ease external financial pressure on these economies.

AXA Investment Managers

We think the FOMC will be forced to ease further at the end of 2020 when it realises that overcapacities are rising again, but this would be more reactive than pre-emptive, and even if the Fed goes “all the way” the quantum of support should not be overstated.

AXA Investment Managers

We don’t see significant directional moves in fixed income – not when monetary policy is anchoring interest rates at such extremely low levels. Global capital flows are also important. Should Treasury yields rise to the 2.0% to 2.5% range, investors from Europe and Japan are likely to become buyers, given the low yields on offer in their domestic markets.

AXA Investment Managers

Our high-yield teams expect default rates to remain low. A bias towards corporate assets in the bond market might continue to be rewarding. In Europe, the fact that the ECB has re-started buying corporate bonds is also a strong support for credit spreads remaining relatively tight.

AXA Investment Managers

Our multi-asset team’s stance is to be more optimistic on equities from a cyclical point of view. Supportive policy and some hope of resolution on the trade war and Brexit should underpin positive sentiment in equity markets.

AXA Investment Managers

Growth should re-assert its dominance over value in a modest economic growth scenario with low interest rates. Cyclicals are still very cheap relative to bond-like defensives and some further valuation adjustment could take place.

Barclays

In Europe our 10-year bund forecast of -30 basis points in the first quarter 20 is again close to spot levels. In our view, bunds are extremely unlikely to go back to the summer lows of around -80 basis points, given the less dovish tone from the ECB in recent meetings and somewhat better data.

Barclays

Following their recent easing, the Fed and ECB are likely to remain on hold for 2020, while keeping an easing bias in light of subdued inflation dynamics and the remaining risks. In the meantime, a number of EM central banks should be able to ease further.

Barclays

The U.S. recovery is long in the tooth, the euro area still faces structural growth issues, and we do not expect material new fiscal help in either economy in 2020. Most important, China does not seem likely to repeat the quasi-fiscal stimulus that it undertook in 2015-16, which set the stage for a global rebound in 2017. We expect global growth to be slightly stronger in 2020 than in 2019, but much weaker than in 2017-18.

BlackRock Investment Institute

Any meaningful support in the euro area will have to come from fiscal policy, and we do not see this in 2020. EMs, however, still have room to provide monetary stimulus.

BlackRock Investment Institute

We see room for many EM central banks to ease, supporting EM growth. This underpins our overweights in EM debt, particularly local-currency, and in high yield.

BlackRock Investment Institute

Growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in U.S.-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.

BlackRock Investment Institute

Our base case is for a mild pickup supported by easy financial conditions, with a slight rise in U.S. inflation pressures. We see China’s economy stabilizing, but little appetite for replays of the large-scale stimulus of the past. We see the growth uptick taking root in the first half of the year, led by global manufacturing activity and rate-sensitive sectors such as housing.

BMO Capital Markets

The next Fed move will be a cut; it is just a matter of time. Further accommodation will be needed to achieve inflation consistently near 2%.

BMO Capital Markets

Negative rates are unlikely in the U.S. during 2020. First, a variety of Committee members including Chair Powell have given a definitive “no” answer to this question. Second, the Fed still has policy space to offer accommodation in addition to quantitative easing.

BNP Paribas Asset Management

Central bank policy to remain easy. Room for further easing looks limited in Europe and Japan; more scope in the U.S. and China if needed.

BNP Paribas Asset Management

“Fragile goldilocks” holds—stabilizing data, loose central bank policy, short-term de-globalization dynamics supporting risky assets.

BNY Mellon

Stimulus could be a catalyst for a normalization in term premium. A bear steepening will be a concern amid improving global activity.

BNY Mellon

Historically low currency volatility has vexed FX investors for the past few years. Yield curve flattening and rates compression, as well as stable long-term fundamentals have conspired to reduce FX spot ranges. For FX volatility to pick up in 2020, we would need to see meaningful policy or real economic divergence.

Capital Economics

We don’t expect the Fed to hike its policy rate in the next couple of years, despite FOMC participants’ median projection in December of a 25 basis point rise in 2021. But we forecast that the 10-year Treasury yield will edge up in 2020 to 2.0% as investors’ expectations for one more cut are dashed.

Capital Economics

Although we forecast that monetary policy will be eased a bit more in 2020-21 in some cases, we don’t expect yields to fall a lot further where this happens. So we project that returns from government bonds will barely exceed those from Treasuries with higher initial yields. In some other cases, we think that returns will actually be worse.

Capital Economics

With the euro-zone economy likely to struggle next year, and no meaningful fiscal loosening on the horizon, we think that the ECB will surprise markets with at least some additional easing.

Capital Economics

Risk-free rates stabilize in the U.S., but fall further in the euro-zone. We also think that spreads in the euro-zone could fall below those in the U.S., despite a weaker economic backdrop in the former, as the ECB steps up its corporate bond buying.

Capital Economics

In contrast to the market, we expect the SNB to cut interest rates further into negative territory next year. And while the Riksbank is dead-set on hiking later this year, we remain confident that it will have to ease policy again in mid-2020.

Capital Economics

Growth is probably bottoming out in Australia but we still expect the labor market to ease further over the coming months, which should result in weaker wage growth and lower inflation before long. We therefore expect the RBA to cut rates to 0.25% by early next year and launch QE, which markets have yet to factor in.

Capital Economics

Slow euro-zone growth will keep core inflation stuck close to 1% in the coming years. We expect the ECB to change its inflation target in the coming months and to cut its deposit rate by a further 30 basis points during 2020, which is more than markets expect. We also think that it will step up its QE from 20 billion euros to 30 billion euros per month in mid-2020, by buying more corporate bonds.

Capital Economics

We think that weak domestic and foreign demand will cause Japanese GDP to fall outright next year. Given mounting concerns over the impact of loose monetary policy on financial stability, we disagree with the consensus view that a further reduction in interest rates is to come and expect the Bank of Japan to leave its policy rate unchanged.

Capital Economics

The strength of Chinese construction activity will not be sustained. Further policy loosening is likely, with the PBOC in particular acting more aggressively than markets envisage. But this will do no more than help struggling sectors to stabilize. We expect China’s growth to slow from around 5.2% this year to 4.5% next, which is worse than generally anticipated.

Citi

This environment of lower rates will likely persist for some time as advanced economies continue to embrace monetary easing. In the U.S., Citi’s economists are expecting the Fed to remain “on-hold” for some time. However, the key point for financial markets is that the Fed is now much more likely to serve as a tailwind than a headwind.

Deutsche Bank Wealth Management

Central banks will remain center stage, despite talk of the end of monetary magic: for an investor, this means that you need to reconcile yourself to living with low interest rates for some while longer. Current financial repression in the form of negative (real) bond yields will continue for some time.

Deutsche Bank Wealth Management

We do not expect the Fed or ECB to cut rates further in the next 12 months, but ECB asset purchases will continue at 20 billion euros per month for the foreseeable future and the Fed will also indulge in “quasi-QE”, although these asset purchases will have the primary intention of maintaining market liquidity rather than interest rate reduction.

Deutsche Bank Wealth Management

Within developed market corporate bonds, we see opportunities in U.S. Investment Grade and the euro zone crossover segment (i.e. lower-rated investment grade, higher-rated high yield). The likelihood of slower growth keeps us more cautious on high yield in general. With the ECB being a large buyer again, the hunt for yield will continue and even lower-rated European bonds will trade on negative yields. Against this background, remember too that U.S. Treasuries still appeal as a source of positive nominal yields.

Eastspring Investments

An extended global growth cycle: The U.S. will enjoy its longest post-war expansion and a recession is not our base case. Fiscal policy will likely matter more than monetary.

Evercore ISI

The outlook for growth and risk assets has improved. Global economic activity, though still stuck in low gear, has started to firm. Earnings growth is set to re-accelerate. Global central banks remain dedicated to reaching their still elusive inflation targets, in part by maintaining asset-friendly financial conditions.

Fidelity International

We expect interest rates to remain low, and perhaps go even lower. Given sizeable outflows from equities in 2019, we expect a recovery in 2020 precisely because interest rates will stay low and investors starved of income will be attracted by returns.

Fidelity International

Corporate concerns about borrowing will only increase if the Democrats appear likely to win the U.S. election and central banks may have little left in the tank to combat these late-cycle dynamics. If the dollar weakens as a result, this could be an opportunity for non-U.S. assets.

Goldman Sachs

This coming year, markets will need to learn to fly on their own, because major central banks will likely keep policy about unchanged—in some cases because they have nowhere else to go.

Goldman Sachs

Bond yields rose sharply after the Fed’s “mid-cycle adjustments” in the 1990s, but we expect only mild upside this time due to muted global inflation pressures and on-hold central banks. Gilt yields should move sharply higher on a Brexit resolution and U.K. fiscal stimulus.

Goldman Sachs

With the Fed on hold and inflation unlikely to take off, we would discourage positioning for a major bear market in U.S. rates next year, even with somewhat better growth.

Hermes Investment Management

The road to “normal” will remain closed off, as central banks fear their own shadows. By factoring in QE, we estimate that the true U.S. funds rate is as low as -2%, and it will not get anywhere close to its pre-2008 levels.

HSBC

Markets may have priced out further rate cuts by major central banks too fast. A sharp, V-shaped recovery of global macro activity is highly unlikely, in our view. However, these scenarios still seem to be priced in.

JPMorgan Asset Management

Central banks are likely to remain a key pillar of market support, given their demonstrated willingness to push deeper into uncharted policy territory to keep the expansion going.

JPMorgan Chase & Co.

As the monetary stimulus acts with a lag, we believe that a cyclical upswing will more decisively manifest itself in 2020.

JPMorgan Chase & Co.

In 2020, forecasts are for modestly higher yields and steeper curves in most DM markets as growth return to potential, inflation inches higher and central banks still keep a bias to ease.

JPMorgan Chase & Co.

Potential concerns: The U.S. politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. The Fed’s credibility might start to be questioned, earnings are overshooting the trend and rising credit concerns could come to the fore. We have consistently argued that one should not expect the next U.S. recession ahead of the presidential elections, but the odds of one might go up significantly post the event, in our view.

JPMorgan Chase & Co.

Global growth to return to above-trend, characterized by fading U.S. outperformance, a European step-up and stable Mainland China. The Fed should ease again, as will several EM central banks.

JPMorgan Chase & Co.

In U.S. HG credit, the team forecasts tighter 2020 year-end spreads at 125 basis points. Drivers include the global search for positive yielding assets, rapidly declining net issuance of HG bond and a positive fundamental backdrop of slow but steady U.S. growth and supportive monetary policy.

Lombard Odier Investment Managers

We expect real rates to remain low and the search for yield to strengthen as a major structural theme because meaningful fiscal easing remains elusive, especially in Europe. We expect additional monetary policy easing from the European Central Bank, whilst the Federal Reserve may have to cut again in the second half. We also expect further accommodation from China as growth remains under pressure against the backdrop of financial stability concerns.

Macquarie Global Macro

We expect the Fed, the ECB and the BOJ to remain on hold over the course of 2020, while the RBA will cut once more in February (Australian consumption and wages growth are weaker than elsewhere), as a modest economic recovery unfolds.

Morgan Stanley

Near term, central bank liquidity could help the S&P 500 overshoot the upper end of our 2020 bull case of 3,250, but by April, the liquidity tailwind will fade and the market will focus more on the fundamentals, where uncertainty is higher than normal.

Morgan Stanley

Easier monetary policy and trade stabilization will help global growth accelerate, but only stabilize GDP growth in the U.S. at 1.8%, leaving pressure on corporate margins from tight labor markets.

NatWest Markets

There will be an end to U.S. exceptionalism: Fragile business sentiment is unlikely to improve ahead of a tight and contentious Presidential election. The Fed responds with two more rate cuts in the first half of 2020.

NatWest Markets

The shift in regional risks toward the U.S. and the Fed’s response should chip away at the dollar’s overvaluation.

NatWest Markets

Supply net of QE from governments will fall by around 100 billion euros to 740 billion euros. But corporate supply may continue its expansion, fueled by a compelling equity

NatWest Markets

European growth should outperform very bearish consensus, in part because Germany delivers a sizable fiscal stimulus. Political risks are receding. ECB may deliver one last 10 basis-point cut.

NatWest Markets

We prefer growth over monetary assets: Central banks will be more reluctant to ease. Fiscal policy will partly fill the void.

Nordea Asset Management

We expect a rapid economic rebound and by mid-2021, when the Fed should be on a path of tightening once again. The pace of tightening should be slow under Democrats as we will likely be in a fiscal contraction given pressure from Republicans to rein in spending.

Nordea Asset Management

The impact of Fed easing on the dollar versus emerging markets and EM hard and local currency fixed income should be quite positive for these asset classes. The impact on equities should be mixed to positive for defensive stocks as it reduces their financing costs (e.g. utilities) while the demand shock should initially hurt cyclicals and growth stocks.

Nordea Asset Management

EM fixed income should benefit from Fed easing (though not everywhere) while EM and European equities (e.g. Sweden) should be a good place to position for an eventual rebound in China and then the U.S.

Northern Trust

The combination of slow growth and technological innovation will continue to suppress inflation, bolstering the global central bank easing cycle underway. This leaves us continuing to favor lower risk risk assets, such as high yield bonds. We also remain constructive on the outlook for interest rates, leading to recommended overweights in global real estate and global listed infrastructure

Oppenheimer

We expect monetary policy to remain supportive of the U.S. economy in 2020.

Oxford Economics

The U.S. economy isn’t about to fall off a cliff. As we peek into the next decade, we believe a soft landing is possible with gently easing employment trends, more cautious business investment, slowing consumer spending momentum and ongoing support from the Federal Reserve. Sub-potential, but not recessionary economy: growth at 1.6%.

Oxford Economics

Inflation undershoots relative to the Fed’s 2% target. One more Fed rate cut in 2020 before a long pause.

Pictet Wealth Management

We do not expect an imminent recession if policy support keeps economies on an even keel – and we favor those countries undertaking fiscal stimulus.

Pictet Wealth Management

Accommodative monetary policies and tepid fiscal policies will help contain further worries over politics and trade and prop up growth to some extent. In these circumstances, 2020 is likely to see low returns across the main asset classes.

Pictet Wealth Management

The dollar is likely to weaken in 2020, given a decline in the growth and rate differentials that have played in its favor up to recently.

PineBridge Investments

Rebooting monetary excess under today’s circumstances is unprecedented. It will magnify modest rebounds in cash flows into more meaningful market movements.

Principal Global Investors

The era of hands-on central banks and hands-off governments is being overturned. While the still-sluggish economic backdrop means central banks won’t withdraw monetary stimulus, they will increasingly look to fiscal policy to add the required additional economic stimulus.

Principal Global Investors

2020 could be the year that “equities vertigo” begins to kick in. Persistent central bank liquidity will continue to fuel stocks. But diminishing monetary effectiveness means this will be delivered via multiple expansion, not earnings growth.

Principal Global Investors

A U.S./China trade resolution, even just a partial deal which stops further tariffs, will reinforce the wealth of China’s stimulus measures introduced over the past year, stabilizing the economy and thereby lifting the emerging Asia region.

RBC Wealth Management

Markets mostly expect central banks to remain on hold for the next year, but the bias will remain toward further easing rather than a return to tightening, anchoring yields across the global landscape near historical lows.

RBC Wealth Management

Central banks’ accommodative monetary policies, as well as some additional fiscal stimulus, will keep most developed economies growing through 2020 and probably longer. This should engender growth in corporate earnings, dividends and buybacks. Share prices should follow all these higher.

Robeco

High yield bonds look less impressive from a risk-return perspective compared to other risky asset classes, with spread widening often already starting in the later stages of the economic cycle. The same holds true for investment grade credits, but at least some of these have the ECB on their side.

Robeco

We think euro-denominated spread products enjoy additional protection given the ECB has only just recommenced its second ever quantitative easing program, with an open-ended nature this time round. In credit, as the last 12 months have shown, opportunities can appear and disappear rapidly. It’s important to have a flexible approach, because the pendulum of market melodrama has a habit of swinging too far.

Robeco

Government bond yields should grind higher as economic conditions improve, with central banks unwilling or unable to ease more. That said, we do not expect an end to extremely low or negative yields any time soon.

Schroders

We expect a loosening of fiscal policy in the U.K. But fiscal stimulus is waning in the U.S. and the political will for significant fiscal easing in Germany seems to be absent. Overall, we put a low probability on there being a major expansion of fiscal policy globally in 2020.

Schroders

Low interest rates are likely to persist, limiting the income on offer from safe assets like cash and government bonds. The income from safe assets will not compensate for inflation. Shares currently offer potentially attractive dividend yields, especially in Europe and Asia.

Societe Generale

Among key calls for 2020 is very broad currency diversification, with one-third only to the USD, one-third to the euro and one-third to the rest (JPY, GBP, EMFX), as correlation within currencies is extremely low. Thus, we have imbedded volatility control here. This clearly shows that, for 2020, we are more pessimistic on the USD outlook than the market average, reasonably more optimistic on the euro and expect the yen to appreciate, albeit at a moderate pace thanks to actions from the Bank of Japan.

Societe Generale

In 2020, it seems that only the U.S. Federal Reserve could really surprise us on the dovish side, which is why we have close to half our sovereign bond allocation in U.S. Treasuries.

Societe Generale

After a wave of rate cuts, and some additional easing by other means, we expect most central banks to take a break for now. However, as U.S. growth slides, we expect the Fed to start cutting rates again in the spring and reduce the Fed funds rate by another 100 basis points. Most central banks around the globe will probably join in, but with scope for policy expansion narrow or practically non-existent in the euro area, Japan, and many other economies, the focus will remain on fiscal policy. But with few exceptions (U.K., South Korea), fiscal policy expansions are likely to be timid and late. Even in Germany we expect only a modest fiscal easing.

Standard Chartered

We are bullish on EM flows through H1-2020, as (1) major central banks are likely to expand their balance sheets to support economic growth, and (2) global growth is slowing but not at risk of recession. EM debt and equities have seen selective foreign buying in Q4 so far, and this trend is likely to continue in H1-2020.

Standard Chartered

We remain near-term neutral on Treasuries but positive for 2020 overall. The Fed’s insurance cuts may extend the expansion, but only temporarily. A post-deal China may resume Treasury purchases; Japan is already buying.

State Street Global Advisors

In the coming year, we believe continued central bank support will warrant an overweight to equities. This generally positive outlook is tempered, however, by increasingly stretched valuations as fundamentals disconnect from returns. This disconnect, combined with persistent trade risk and the prospect of recurrent bouts of volatility, will lead us to maintain a defensive posture in our equity allocations.

State Street Global Advisors

Stimulative central bank activity should reap benefits, including keeping GDP growth near its potential. The result should be a favorable backdrop for corporate issuers, who should see fairly stable ratings. Corporate bond holders across the spectrum (investment grade through high yield) will see additional benefit through improved market technicals: Issuance is trending lower and ECB purchases will drive prices up

State Street Global Advisors

We believe that the global economic recovery will continue in 2020, although it may have to sidestep substantial risks to sustain momentum. Those risks notwithstanding, renewed monetary policy support and resilience in consumer spending and services should help to propel the cycle forward.

TD Securities

The correlation and convergence in DM rates should intensify, with the U.S. leading rates lower. We like owning duration across the board, preferring U.S. versus EU and Canada versus U.S. and U.K.

TD Securities

We generally prefer rolling out the curves in Asia, Latam, and CEE, but EM carry has not been this low (~1.8%) since at least the first half of 2011. Central banks that over-eased beyond the pace of inflation, compressing real yields (TRY, BRL, INR, HUF) prone to volatility.

TD Securities

The first half of 2020 will repeat many of the themes from 2019: further central bank easing and disappointing growth in some regions, with inflation struggling to reach target across most major economies. By mid-year, looser financial conditions and gradually fading uncertainty should mark an inflection point, with global growth slowly returning to trend over the following quarters.

UBS

Policy makers who are willing (ECB, BOJ) have been less able to lift nominal growth, while those who are able (China, Germany) are not willing to loosen strongly. Risk premia may uncoil.

UBS

The gravity of zero and the world beneath it should keep duration bid, especially in the developed markets. Get used to flat curves.

Unigestion

Macro conditions warrant a low level of yields for longer, and real money will keep on allocating big portions of their asset allocation to duration. However, the valuation of the asset class is amongst the most expensive across risk premia, with real yields in (very) negative territories and disconnected from fundamentals. Expectations are much lower going into 2020, and the most optimistic projections indicate a 2% to 3% performance next year, less than half of this year’s. However, less does not mean negative, and carry-deprived investors will keep demand high, while central bank accommodation will keep liquidity flowing, benefiting these asset classes.

Unigestion

Our proprietary Nowcasters still indicate a low probability of economic contraction in the short run. Our core scenario for next year remains one of tepid yet positive economic expansion, with minimal risk of inflationary or central bank surprises. They should stay quiet at least for the first half of the year, assessing the impacts of the latest round of accommodation on the real economy.

Vanguard

Vanguard expects the Fed to further reduce the federal funds rate by 25-50 basis points before the end of 2020.

Vanguard

Upon factoring in lower expectations for global growth, inflation, and interest rates, the annualized return for the U.S. equity market over the next 10 years is in the 3.5%-5.5% range.

Wells Fargo Investment Institute

Interest rates are likely to remain near historically low levels. While we do not anticipate negative yielding debt in the U.S., we expect negative-yielding debt levels globally to remain elevated.

Wells Fargo Investment Institute

The U.S. and other developed markets may avoid a recession in 2020. However, financial markets may only see modest upside as geopolitical risks linger and monetary policy approaches the end of its effectiveness.

Wells Fargo Securities

One of our biggest worries is interest rate risk/volatility. Interest rates are becoming less negative in Europe, and if this trend continues we would expect a material lift in U.S. rates. This would likely have a spillover effect and cause an aggressive valuation-multiple adjustment in equities. Conversely, another spate of bad news could bring interest rates lower, and talk of negative rates in the U.S. could arise again (as occurred in August). In our view this would also cause an aggressive contraction of the market multiple.

Wells Fargo Securities

Heading into 2020, investors need to be prepared for a more volatile equity market. With the VIX around 12 and IG credit spreads around 100 basis points, we see material scope for an upward move. A 10% stock market correction in the first half is possible; we can envision one in late March/early April when the Fed’s balance sheet possibly stops growing

Aberdeen Standard Investments

Investment returns from traditional assets to be much lower than in the past. A significant amount of government bonds are already yielding negative. The late stage of the business cycle and the lack of room for corporate margin expansion suggest that equity returns will be below their long-term average. The classic rotation from equities to government bonds and investment grade credit will no longer be appropriate in this cycle.

Amundi Asset Management

The hunt for yield will remain a key theme, in the era of ultralow interest rates (not necessary negative) and central banks restoring some sort of quantitative easing or even going beyond it. However, crowded areas and liquidity risk persist and require a deep dive into credit opportunities (both in developed and emerging space). High yield will remain attractive, amid a benign default outlook. However, having an adequate time horizon in mind would be important, even more now that a possible mismatch between scarce market liquidity and fund daily liquidity is striking. From a company perspective, increased scrutiny at sector and security level will also be key to avoid unsustainable business models, just kept alive by investors’ appetite for yield.

AXA Investment Managers

Looking ahead, elements of risk in fixed income such as low volatility, negative-term premia, liquidity risk, are likely to affect performance in the rates markets.

Barclays

Without sustained further declines in risk aversion or the U.S. economy, neither of which we expect, additional dollar weakening is unlikely. On the other hand, with non-U.S. economies bottoming, we do not forecast sustained dollar strength. Across 2020, we forecast a 2.2% real appreciation of the dollar on a trade-weighted basis, with much of this coming from negative yielding European currencies.

BMO Capital Markets

Negative rates are unlikely in the U.S. during 2020. First, a variety of Committee members including Chair Powell have given a definitive “no” answer to this question. Second, the Fed still has policy space to offer accommodation in addition to quantitative easing.

Citi

Fixed income returns may be lower in 2020 than in 2019 — perhaps in the range of 1.0% to 2.0%. Regionally, fixed income assets in Japan and Europe look the most risky to us with negative yields prevalent across the regions.

Columbia Threadneedle

On the fixed income side, ongoing uncertainty means opportunities will be as hard to find as they are in the equity universe, but quality or safe havens should again be a priority for investors. These may be rare, given the percentage of the bond universe that is yielding nothing or negatively. We remain overweight in credit, while our skew towards quality companies is also an ongoing investment focus for us.

Deutsche Bank Wealth Management

Central banks will remain center stage, despite talk of the end of monetary magic: for an investor, this means that you need to reconcile yourself to living with low interest rates for some while longer. Current financial repression in the form of negative (real) bond yields will continue for some time.

Fidelity International

If growth begins to recover in 2020, there could be a shift back to the value and cyclical stocks that have previously been overlooked. Banks are the exception. The pricing of their raw material - namely interest rates - will remain extremely low and perhaps go even more negative.

JPMorgan Asset Management

Central banks are likely to remain a key pillar of market support, given their demonstrated willingness to push deeper into uncharted policy territory to keep the expansion going.

Morgan Stanley

Europe is the only market where strategists see multiple expansion for equities. Several contributing factors, including less uncertainty around Brexit, asset allocation decisions away from negative-yielding bonds and global investor base that is under-indexed to Europe may all boost demand for European stocks.

Schroders

We favor government bonds from the U.S. over other countries because they offer positive yields. The 10-year Treasury currently yields 1.78%, compared to -0.35% from the equivalent German Bund, for example. Treasuries also have a higher sensitivity to economic risks; that is, they tend to outperform other bonds during a slowdown.

UBS

The gravity of zero and the world beneath it should keep duration bid, especially in the developed markets. Get used to flat curves.

Wells Fargo Investment Institute

Interest rates are likely to remain near historically low levels. While we do not anticipate negative yielding debt in the U.S., we expect negative-yielding debt levels globally to remain elevated.

Wells Fargo Securities

One of our biggest worries is interest rate risk/volatility. Interest rates are becoming less negative in Europe, and if this trend continues we would expect a material lift in U.S. rates. This would likely have a spillover effect and cause an aggressive valuation-multiple adjustment in equities. Conversely, another spate of bad news could bring interest rates lower, and talk of negative rates in the U.S. could arise again (as occurred in August). In our view this would also cause an aggressive contraction of the market multiple.

Aberdeen Standard Investments

Secular stagnation with low growth, weak inflation and low interest rates is likely to define global economy for the next five years. Going into 2020, rising policy and political uncertainty will continue to weigh on industrial, trade and investment activities. We have downgraded our global GDP growth forecasts for 2020 and 2021 to 3.1%, well below the post-crisis average. A recession could be avoided next year but the risks have clearly increased.

AXA Investment Managers

Exposure to a global inflation risk-premium through inflation-linked bonds and to higher bond income through European high-yield is a useful complement to our tilt towards equity markets.

Barclays

Following their recent easing, the Fed and ECB are likely to remain on hold for 2020, while keeping an easing bias in light of subdued inflation dynamics and the remaining risks. In the meantime, a number of EM central banks should be able to ease further.

BlackRock Investment Institute

U.S. Treasuries maintain their ballast properties against equity market selloffs, in our view, but it is time to rethink the role of government bonds outside the U.S. We also see a case for substituting some nominal government bond exposures for Treasury Inflation-Protected Securities (TIPS) as a source of resilience against future inflation surprises. We favor the front end of the Treasury curve on a tactical basis. This segment is less vulnerable to growth- and inflation- induced steepening.

BlackRock Investment Institute

Growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in U.S.-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.

BlackRock Investment Institute

Our base case is for a mild pickup supported by easy financial conditions, with a slight rise in U.S. inflation pressures. We see China’s economy stabilizing, but little appetite for replays of the large-scale stimulus of the past. We see the growth uptick taking root in the first half of the year, led by global manufacturing activity and rate-sensitive sectors such as housing.

BlackRock Investment Institute

The main risk to our outlook is a gradual change in the macro regime. One such risk: Growth flatlines as inflation rises. This might pressure the negative correlation between stock and bond returns over time, reducing the diversification properties of bonds.

BlackRock Investment Institute

Risks are are tilted downward for growth because any renewed escalation of trade tensions could derail the growth uptick we expect. Inflation, by contrast, could surprise to the upside, particularly in the U.S.

BMO Capital Markets

The next Fed move will be a cut; it is just a matter of time. Further accommodation will be needed to achieve inflation consistently near 2%.

BNP Paribas Asset Management

Our base case is vulnerable to a more entrenched “synchronised slowdown” or a sustained “reflation” environment. Fixed income markets are most at risk from sustained move to reflation.

BNY Mellon

Tariffs remain a core concern in emerging markets, which should push global inflation higher.

Capital Economics

Even in the U.S., where the economic outlook seems relatively bright, we expect actual and expected inflation to stabilize, rather than rebound.

Capital Economics

As precious metals are a “real” asset, their returns tend to follow those from TIPS more closely than those from other havens. But they are also more volatile, meaning they outperform when returns from TIPS are good, and underperform when they are bad. We therefore expect precious metals to struggle, as TIPS yields stabilize and physical demand remains weak.

Capital Economics

Slow euro-zone growth will keep core inflation stuck close to 1% in the coming years. We expect the ECB to change its inflation target in the coming months and to cut its deposit rate by a further 30 basis points during 2020, which is more than markets expect. We also think that it will step up its QE from 20 billion euros to 30 billion euros per month in mid-2020, by buying more corporate bonds.

Deutsche Bank Wealth Management

Inflation will not be an issue in the medium term with U.S. inflation forecast to remain slightly lower than 2% – and euro zone and Japanese inflation lower still.

Deutsche Bank Wealth Management

With inflation hovering near historical lows, emerging market real yields are materially higher than developed market real yields (for example in Germany or the U.S.). Within emerging market bonds, our overweight positions include India. We have a neutral position on China and a neutral position on Asia and Latin America overall. We have an underweight on Brazil.

Evercore ISI

The global savings glut and “deflation hedging” will keep 10-year yields pinned, which combined with strong cash returns will leave the equities offering an attractive risk premium as the S&P reaches a new all-time high.

Fidelity International

Inflation has been below target in recent years, but could re-emerge to some degree in 2020 and beyond. The market is overly pessimistic about inflation, in our view, with global breakevens trading at a discount to core inflation. While consensus estimates of U.S. inflation in 2020 are 2.1%, our estimate is closer to 2.5% driven by building wage pressures amid historically low unemployment and a strong U.S. consumer.

Goldman Sachs

Bond yields rose sharply after the Fed’s “mid-cycle adjustments” in the 1990s, but we expect only mild upside this time due to muted global inflation pressures and on-hold central banks. Gilt yields should move sharply higher on a Brexit resolution and U.K. fiscal stimulus.

Goldman Sachs

EM (ex-China) growth, inflation will bounce off lows, but output gaps remain. We expect positive returns for EM assets under baseline scenarios with a relatively better environment for EM equities and equity-centric exposures in EM currencies. 2019 will still be a year for navigating around potholes; hedges will be key.

Hermes Investment Management

Inflation will reappear - but, it will be the ‘wrong sort’. Central banks will have to ‘turn a blind eye’ as economies stagflate. With the cost-inflation proving temporary, we may then, in the longer-term, need a sizeable mindset shift as deflationary forces (demographics etc) re-emerge.

Hermes Investment Management

Political fragility, protectionism, cost-inflation, and dissipating growth suggest renewed volatility.

Hermes Investment Management

Political distrust and beggar-thy-neighbor policies will continue to build. The 1930s revealed few winners from a trade war. Retaliation could eventually include a reluctant China currency-devaluation. This, alongside other factors, threatens a deflationary return to the U.S.

JPMorgan Asset Management

Inflation appears to be off the cards for now, but any resurgence would likely upset the price of both stocks and bonds, so real assets could provide a useful portfolio buffer.

Northern Trust

The combination of slow growth and technological innovation will continue to suppress inflation, bolstering the global central bank easing cycle underway. This leaves us continuing to favor lower risk risk assets, such as high yield bonds. We also remain constructive on the outlook for interest rates, leading to recommended overweights in global real estate and global listed infrastructure

Oxford Economics

Inflation undershoots relative to the Fed’s 2% target. One more Fed rate cut in 2020 before a long pause.

Robeco

Should the U.S. economy avoid recession but growth remain sluggish, selected BBB and BB EM local government bonds should fare well. But in a more pronounced recovery scenario, we see three opportunities: global inflation-linked bonds, selected cyclical currencies and Eurozone periphery bonds.

Robert W. Baird & Co.

Expectations are that earnings growth will rebound in 2020, though current estimates may prove to be too robust. One thing working against profits right now is that labor costs are rising at a faster pace than pricing. This downside to low inflation is a negative for profits – and it should not be overlooked that the broadest measures of corporate profits have not gone anywhere for five years.

Schroders

We are still more worried about growth disappointing than we are about inflation picking up. As a result, we still believe that government bonds are a potentially attractive hedge for multi-asset investors.

Standard Chartered

China’s economy should find some stability from reduced trade tensions with the U.S., but deflation risks remain due to the weakness in PPI.

TD Securities

The first half of 2020 will repeat many of the themes from 2019: further central bank easing and disappointing growth in some regions, with inflation struggling to reach target across most major economies. By mid-year, looser financial conditions and gradually fading uncertainty should mark an inflection point, with global growth slowly returning to trend over the following quarters.

Unigestion

We also favor diversifying carry strategies in FX, credit and volatility. Conversely, we are staying away from real assets and government bonds. Real assets will be penalized by the lack of inflationary pressures, while government bonds will suffer from a macroeconomic stabilization.

Vanguard

Upon factoring in lower expectations for global growth, inflation, and interest rates, the annualized return for the U.S. equity market over the next 10 years is in the 3.5%-5.5% range.

Wells Fargo Investment Institute

Wells Fargo Securities Economics Group forecasts slowing economic growth and low inflation for the U.S. and the largest international economies. Global growth may show little improvement in 2020.

Aberdeen Standard Investments

Significant monetary easing by central banks should support growth at low but positive levels. We expect the U.S. Federal Reserve’s last rate cut in this mini-cycle to come in the first half of 2020, and the European Central Bank to take further steps. We also expect further action by central banks in Australia, Canada, Brazil, China, India and Russia in the coming months, and more fiscal stimulus next year as politicians look again at their tax and spending programmes. Such measures should help cushion any market shocks.

Amundi Asset Management

Income and opportunities from rotation towards neglected areas will be the equity 2020 story. The lack of strong directional trends in the markets, and weak earnings growth should drive investors to search for areas of resilience in the equity income/dividend space. Once the outlook stabilizes, and yields bottom out (PMI – purchase managers index - rebound expected in the first half, some fiscal expansion gears up later on), there could be some potential for rotation in areas of attractive valuations. Cyclical stocks (quality in Europe and value in U.S.) and small caps would present opportunities to exploit throughout the year.

Amundi Asset Management

Monetary and fiscal combination, a theme that will become prominent next year and beyond, may extend the cycle further, and may as well strengthen the resilient domestic demand. While the noise on trade-related issues will be high, a material escalation, which could damage the U.S. economy, is unlikely, given the upcoming U.S. elections in 2020.

Amundi Asset Management

In an environment of monetary and fiscal accommodation, EM bonds are attractive, with a preference for the hard currency, and with opportunities opening up in local currencies through the year.

Barclays

The U.S. recovery is long in the tooth, the euro area still faces structural growth issues, and we do not expect material new fiscal help in either economy in 2020. Most important, China does not seem likely to repeat the quasi-fiscal stimulus that it undertook in 2015-16, which set the stage for a global rebound in 2017. We expect global growth to be slightly stronger in 2020 than in 2019, but much weaker than in 2017-18.

BlackRock Investment Institute

Any meaningful support in the euro area will have to come from fiscal policy, and we do not see this in 2020. EMs, however, still have room to provide monetary stimulus.

BlackRock Investment Institute

We see the presidential election overshadowing the U.S. fiscal policy debate in 2020. Changing market expectations around the election outcome — and its implications for trade, taxes, public investment and regulation — look more likely as drivers for industry sectors and the overall market.

BlackRock Investment Institute

We see any fiscal support from China as limited and not delivering the countercyclical boost it has in the past. A material escalation in U.S.-China trade tensions could shift China’s fiscal policy stance. But our base case is that tensions move sideways and do not escalate.

BNP Paribas Asset Management

Fiscal policy could be a game changer. U.S. and Chinese policies are already expansionary but hurdles for European fiscal stimulus are high.

Capital Economics

With the euro-zone economy likely to struggle next year, and no meaningful fiscal loosening on the horizon, we think that the ECB will surprise markets with at least some additional easing.

Capital Economics

Euro-zone growth is likely to be far weaker than the consensus assumes next year, as industry stays in the doldrums, the services slowdown gathers pace and fiscal policy is of little help.

Citi

We would not be surprised to see increased market volatility ahead of the U.S. election (just as we did in 2016), but we are not ready to completely ignore the potential positives of an election year either. With most candidates desiring a strong economy during their term, we think that the election could actually support equities if discussions eventually turn to fiscal stimulus in the form of tax cuts 2.0 or infrastructure spending.

Columbia Threadneedle

More generally, a risk to the upside could come in the shape of a sudden acceleration in growth. Some believe this is likely because costs to businesses are currently low, with interest or borrowing rates low, as well as commodity and specifically oil prices. Also, the trade disputes could dissipate, while governments may increase or prolong fiscal stimulus.

Deutsche Bank Wealth Management

Calls for fiscal stimulus will become more vocal in 2020 but the impact of existing U.S. fiscal stimulus is fading and no big change in euro zone fiscal policy is likely, despite obviously divergent trends between the two regions. While we may get some gentle easing in euro zone fiscal policy we don’t envisage a massive fiscal boost.

Eastspring Investments

An extended global growth cycle: The U.S. will enjoy its longest post-war expansion and a recession is not our base case. Fiscal policy will likely matter more than monetary.

Fidelity International

As central banks run out of ammunition to stimulate growth, we expect attention to shift to fiscal policy. We are probably underestimating the fiscal room for maneuver in China and the U.S., while central bankers in Japan and Europe are both telling their states to spend more.

Fidelity International

The key risk for 2020 is that central bank policy fails to generate growth, governments shrink from fiscal stimulus and the global economy plunges into recession.

Goldman Sachs

Bond yields rose sharply after the Fed’s “mid-cycle adjustments” in the 1990s, but we expect only mild upside this time due to muted global inflation pressures and on-hold central banks. Gilt yields should move sharply higher on a Brexit resolution and U.K. fiscal stimulus.

Hermes Investment Management

Governments will increasingly offer fiscal solutions to appease voters, and retrieve the ‘baton’ from central banks. Trump may reflate again in his election year to reattract centrist voters; Abe is taking Japan into its third decade of loosening; and the U.K. is ditching its deficit-ceiling. Even in the euro-zone, deficit-reduction and negative yields should make it easier to permit fiscal expansion.

Lombard Odier Investment Managers

We expect real rates to remain low and the search for yield to strengthen as a major structural theme because meaningful fiscal easing remains elusive, especially in Europe. We expect additional monetary policy easing from the European Central Bank, whilst the Federal Reserve may have to cut again in the second half. We also expect further accommodation from China as growth remains under pressure against the backdrop of financial stability concerns.

NatWest Markets

European growth should outperform very bearish consensus, in part because Germany delivers a sizable fiscal stimulus. Political risks are receding. ECB may deliver one last 10 basis-point cut.

NatWest Markets

We prefer growth over monetary assets: Central banks will be more reluctant to ease. Fiscal policy will partly fill the void.

Nordea Asset Management

We expect a rapid economic rebound and by mid-2021, when the Fed should be on a path of tightening once again. The pace of tightening should be slow under Democrats as we will likely be in a fiscal contraction given pressure from Republicans to rein in spending.

Pictet Wealth Management

Accommodative monetary policies and tepid fiscal policies will help contain further worries over politics and trade and prop up growth to some extent. In these circumstances, 2020 is likely to see low returns across the main asset classes.

Pictet Wealth Management

We do not expect an imminent recession if policy support keeps economies on an even keel – and we favor those countries undertaking fiscal stimulus.

Principal Global Investors

The era of hands-on central banks and hands-off governments is being overturned. While the still-sluggish economic backdrop means central banks won’t withdraw monetary stimulus, they will increasingly look to fiscal policy to add the required additional economic stimulus.

RBC Wealth Management

Central banks’ accommodative monetary policies, as well as some additional fiscal stimulus, will keep most developed economies growing through 2020 and probably longer. This should engender growth in corporate earnings, dividends and buybacks. Share prices should follow all these higher.

Schroders

We expect a loosening of fiscal policy in the U.K. But fiscal stimulus is waning in the U.S. and the political will for significant fiscal easing in Germany seems to be absent. Overall, we put a low probability on there being a major expansion of fiscal policy globally in 2020.

Societe Generale

The EM space still offers value overall, with real yields still above those in the rest of the G10. As we still have a cautious view on most emerging market currencies, we do not recommend strong exposure to EM fixed income. But the fall in bond yields and receding trade-war fears should help most EM Asia equity markets. China remains our long-term top pick but we trim our very substantial exposure after the stellar performance this year. EM Europe would obviously benefit from European fiscal stimulus. In Latam, with a dovish central bank and more limited risk on the BRL, in a context of sharp reacceleration of the economy, we recommend Brazil equities as an outlier.

Societe Generale

After a wave of rate cuts, and some additional easing by other means, we expect most central banks to take a break for now. However, as U.S. growth slides, we expect the Fed to start cutting rates again in the spring and reduce the Fed funds rate by another 100 basis points. Most central banks around the globe will probably join in, but with scope for policy expansion narrow or practically non-existent in the euro area, Japan, and many other economies, the focus will remain on fiscal policy. But with few exceptions (U.K., South Korea), fiscal policy expansions are likely to be timid and late. Even in Germany we expect only a modest fiscal easing.

Standard Chartered

Europe’s recovery remains tenuous and may continue to stagnate without fiscal stimulus.

State Street Global Advisors

Robust domestic demand and fiscal supports lead us to favor North American equities, where we believe there is a lower probability of earnings disappointment.

TD Securities

Markets typically struggle to price in election risks due to inherent binary risks. We expect realized equity and rate vol to remain high as investors parse through the two agendas relating to tax policy, regulation, fiscal spending, and trade policy.

Amundi Asset Management

Monetary and fiscal combination, a theme that will become prominent next year and beyond, may extend the cycle further, and may as well strengthen the resilient domestic demand. While the noise on trade-related issues will be high, a material escalation, which could damage the U.S. economy, is unlikely, given the upcoming U.S. elections in 2020.

Bank of America

The trade war remains at the core of our macro forecasts, while of course, 2020 U.S. elections approach. We are moderately optimistic, as reflected by our expectations for higher U.S. yields and a softer dollar in both G10 and EM.

Barclays

We do not expect a significant and sustained de-rating of U.S. equities if Senator Warren (or a similarly progressive candidate) becomes the Democratic nominee. We find it very unlikely that either party will win a filibuster-proof Senate majority or change the filibuster rules, And recent history suggests that it is very hard to pass major legislation, given the partisanship in Washington. Given the sweep of proposed reforms, any administration would have to prioritize a few things to focus on, instead of pursuing all of them.

Barclays

There could clearly be some headline risk for stocks once there is clarity on the Democratic nominee. The equity volatility markets are implying a 1.5% move in broad stock indexes around Super Tuesday (March 6, 2020), when a large number of Democratic primaries are held, and a 3% move on the day of the general elections.

BlackRock Investment Institute

We remain modestly overweight equity and credit due to the firming growth outlook and pricing that still looks reasonable against the macro backdrop. Yet we have made meaningful changes to our granular views. We see potential for a bounce in cyclical assets in our base case: We prefer Japanese and EM equities, as well as EM debt and high yield. We are cautious on U.S. equities amid 2020 election uncertainties.

BlackRock Investment Institute

We see the presidential election overshadowing the U.S. fiscal policy debate in 2020. Changing market expectations around the election outcome — and its implications for trade, taxes, public investment and regulation — look more likely as drivers for industry sectors and the overall market.

BMO Capital Markets

The presidential election is likely to go down to the wire similar to 2016 and should be a highly traded theme as the election nears. By Super Tuesday on March 3, we will likely know the Democratic candidate—or at least the two finalists. This will usher in the stage when economic policy initiatives and changes to the federal government’s regulatory stance will come into play.

BNY Mellon

The 2020 elections will likely add volatility to equity markets for two main reasons. First, pressure to breakup Big Tech is likely only to increase and become a more bipartisan topic. Second, protectionism shall also turn into a topic championed by both sides of the aisle. The Affordable Care Act will likely receive less attention from both parties, which should be positive news for markets.

Capital Economics

Though not our central forecast, a Sanders or Warren victory in the U.S. election is a significant risk to equities there in particular.

Capital Economics

We doubt that risk premiums will fall a lot while the outcome of the U.S. elections is unclear and because the U.S. and China won’t iron out their differences.

Capital Economics

The elections in the U.S. next year pose a big risk to our baseline assumption. We think that equities there would underperform those in many other markets if either Elizabeth Warren or Bernie Sanders were elected president, especially if the Democrats also gained full control of Congress. The re-election of Donald Trump, particularly if the Republicans themselves gained full control of Congress, could conceivably have the opposite effect.

Citi

We think that the bull market remains intact and believe that global equities could return 6% to 8% in 2020. In the United States, Citi is looking for similar returns with a year-end S&P 500 target of 3,375. Sectors that are most sensitive to the economic cycle (or cyclicals) may have further room to run. However, we are viewing the back half of 2020 through a more defensive lens with the U.S. election quickly approaching.

Citi

We would not be surprised to see increased market volatility ahead of the U.S. election (just as we did in 2016), but we are not ready to completely ignore the potential positives of an election year either. With most candidates desiring a strong economy during their term, we think that the election could actually support equities if discussions eventually turn to fiscal stimulus in the form of tax cuts 2.0 or infrastructure spending.

Citi

Leading economic indicators like the brief inversion of the yield curve and some tightening in credit conditions for commercial and industrial firms point to the potential for some economic weakness in the second half of 2020. Combined with concerns about a potential change in tax policy and tighter business regulation should the White House flip, this could lead to some market volatility in the back half of 2020.

Fidelity International

Another key risk for markets is the outcome of the U.S. election. If Elizabeth Warren is chosen as the Democratic frontrunner and the impeachment process overwhelms Donald Trump, the share prices of U.S. corporates could take a hit. Private capital too is likely to be a target for Warren, given her focus on corporate taxes.

Fidelity International

The world will avoid a global recession in 2020. The earnings outlook is improving, but U.S. election risk remains high.

Fidelity International

Corporate concerns about borrowing will only increase if the Democrats appear likely to win the U.S. election and central banks may have little left in the tank to combat these late-cycle dynamics. If the dollar weakens as a result, this could be an opportunity for non-U.S. assets.

Goldman Sachs

There are also plenty of risks, including the trade war and the possibility that the next Congress will reverse the 2017 U.S. corporate tax cut. if the 2017 corporate tax cut were to be entirely reversed and the bill applied retroactively to the start of the year, S&P 500 earnings growth in 2021 would contract by 7%, compared with our strategists’ baseline estimate of +5%.

JPMorgan Chase & Co.

The two most likely outcomes of U.S. elections are Trump’s re-election or an experienced centrist Democrat, which would be neutral or positive for markets (at least initially). While we will continue to re-assess potential election scenarios, at the moment we do not think that elections are a key risk that should keep investors out of risk markets.

JPMorgan Chase & Co.

2020 is a U.S. election year, and markets typically advanced strongly in the run-up to the presidential elections.

JPMorgan Chase & Co.

We believe that the trade war is now abating, driven by a political interest of keeping markets on an upward trajectory going into the U.S. presidential elections.

JPMorgan Chase & Co.

We continue to believe that U.S. recession is unlikely over the next quarters, and that the manufacturing activity downturn witnessed over the past 18 months is likely to end, partly helped by the trade truce. PMIs are expected to rebound and the positive impact from recent Fed cuts is likely to filter into the economy in the first half.

JPMorgan Chase & Co.

Potential concerns: The U.S. politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. The Fed’s credibility might start to be questioned, earnings are overshooting the trend and rising credit concerns could come to the fore. We have consistently argued that one should not expect the next U.S. recession ahead of the presidential elections, but the odds of one might go up significantly post the event, in our view.

Lombard Odier Investment Managers

The U.S. presidential race is likely to tighten as we traverse through 2020 – thus shaping up to be a major risk for assets, especially if Elizabeth Warren becomes the Democratic front-runner.

Lombard Odier Investment Managers

Major issues between the U.S. and China remain unaddressed, and the presidential elections and the impeachment inquiry are incentivizing the Trump administration to finalize a deal, in our view. we find it hard to see how tariffs could revert back to pre-trade war levels anytime soon.

Macquarie Global Macro

The dollar will gradually deflate over the course of 2020 as U.S.-China trade tensions moderate, hard Brexit risks diminish, and global growth picks up. Towards the end of 2020, escalating U.S. political risk could deal a more severe blow, but we need to get much closer to the Presidential election before the FX consequences are felt.

Macquarie Global Macro

The biggest risk remains an escalation of the trade war. With business investment already falling in most major economies, any increase in tariffs could see business “shut up shop” ahead of the U.S. election, resulting in a significant downturn/recession in the second half of 2020.

Morgan Stanley

Global bond markets will likely diverge in the year ahead. Strategists think U.S. and Japanese government bonds will do better than U.K. gilts and German Bunds. Of course, the U.S. presidential election could upend this outlook.

Morgan Stanley

In the U.S., fundamentals will ultimately dictate market outcomes in 2020. Rather than hitch their wagons to the index, investors should watch for rotations between styles and sectors. We expect the market to vacillate between a pro-cyclical outcome and a defensive one as data comes in and trade tensions and elections evolve. In either case, we think growth stocks could be the relative loser as the crowded source of funds.

NatWest Markets

There will be an end to U.S. exceptionalism: Fragile business sentiment is unlikely to improve ahead of a tight and contentious Presidential election. The Fed responds with two more rate cuts in the first half of 2020.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Oxford Economics

The national economy favors a Donald Trump win.

Pictet Wealth Management

We are neutral on global equities, seeing the U.S. elections, trade tensions and the risks to consumer spending as potential sources of volatility. But we also see volatility as an asset class to be exploited.

Robeco

We expect Trump to remain U.S. president after the elections because the incumbent party tends to win whenever the economy is improving. We acknowledge, however, that the way to that victory is likely to be volatile.

Schroders

The impact of a more left-leaning U.S. government would have a muted impact on our growth forecasts, but would impact the corporate earnings outlook in the U.S.

Standard Chartered

We argue that dollar weakness is the most likely, but not the only, outcome of a Democrat victory. Much will depend on whether the Democrats control the Senate as well as the House, and how they sequence their policy moves.

Standard Chartered

With U.S. equities at record highs, little election risk appears to be priced in yet. It is hard to envision an equity-positive risk scenario under a Democrat president given the likelihood of higher corporate taxation.

TD Securities

Before the election, the announcement of the Democratic nominee might itself move markets. A Warren nomination could be perceived as negative for risk assets, especially given her views on taxes and regulation.

TD Securities

We look for the most extreme outcomes following the Red Sweep and Blue Sweep scenarios, as both would entail a significant departure from the status quo. A Red Sweep could bring Tax Cuts 2.0 and an extension of the business-friendly backdrop, sending both equities and deficits soaring. A Blue Sweep could weigh sharply on risk assets depending on what the eventual Democratic platform looks like as the market-friendly policies of the Trump administration are reversed. A divided government may not result in any sweeping changes, but there may be some bipartisan support for limited infrastructure spending, which would boost growth and deficits. This is likely to bear steepen the curve.

TD Securities

While some of the trade war headlines might subside, we think political risk may actually be higher in 2020 due to impeachment and the election. Impeachment may energize the base of either or both parties, making the election even more difficult to call.

TD Securities

Markets typically struggle to price in election risks due to inherent binary risks. We expect realized equity and rate vol to remain high as investors parse through the two agendas relating to tax policy, regulation, fiscal spending, and trade policy.

UBS

We expect a weak first half for equities, and a better second half. U.S. to outperform Europe over a bumpy ride. Extreme outcomes are unlikely, whoever the next U.S. president is. We expect volatility, but over the year, we prefer the S&P 500 over Europe. Our other preferred markets are Japan, China and the U.K., while we are cautious on Australia and EM excluding China. We’re unlikely to have the conditions for a broad renaissance in Value equities until potentially the second half.

Wells Fargo Investment Institute

We believe U.S. elections, the strategic conflict with China, and the degree of moderation in the U.S./global economic growth outlook will be the biggest drivers for markets in 2020.

Wells Fargo Securities

Trump’s re-election prospects are relatively strong. However, we expect that at some point in the next six months his Democrat challenger will gain momentum – at least temporarily. This could be a catalyst for an equity pullback.

Aberdeen Standard Investments

Lingering political uncertainty will create persistent direct and sentiment-driven drags on global trade, business investment and services. U.S.-China trade tensions remain a key risk and we do not foresee a quick resolution. Korea and Taiwan are vulnerable to trade conflict centred on the technology sector; while the dispute between Japan and Korea will further disrupt the global tech supply chain.

Amundi Asset Management

We remain constructive on the main peripheral European countries (Spain and Italy), fueled by ECB action, a new political coalition in Italy and the ongoing search for yield. Curves are expected to flatten.

AXA Investment Managers

In the U.S., the most immediate impact of the impeachment saga is to boost the most radical Democratic candidates in the Primaries. With their regulation and tax-heavy platform, they may further add to the wait-and-see attitude on corporate investment decisions.

AXA Investment Managers

In the euro area, while political developments in Italy have allowed to defuse the tension with the European institutions, instability could come back there on the back of daunting regional elections and potential referendums.

Barclays

Peripheral European sovereign spreads have widened over the past month, but we see this as an opportunity. A fragile political situation in Spain, disappointing growth in Portugal and planned strikes in France could all push sovereign spreads a little wider, but for investors with a three-month or longer horizon, we recommend European peripheral sovereign spreads.

Barclays

We forecast pound outperformance within Europe, predicated on a secured Withdrawal Agreement early next year.

Barclays

We do not expect a significant and sustained de-rating of U.S. equities if Senator Warren (or a similarly progressive candidate) becomes the Democratic nominee. We find it very unlikely that either party will win a filibuster-proof Senate majority or change the filibuster rules, And recent history suggests that it is very hard to pass major legislation, given the partisanship in Washington. Given the sweep of proposed reforms, any administration would have to prioritize a few things to focus on, instead of pursuing all of them.

Barclays

There could clearly be some headline risk for stocks once there is clarity on the Democratic nominee. The equity volatility markets are implying a 1.5% move in broad stock indexes around Super Tuesday (March 6, 2020), when a large number of Democratic primaries are held, and a 3% move on the day of the general elections.

BMO Capital Markets

The presidential election is likely to go down to the wire similar to 2016 and should be a highly traded theme as the election nears. By Super Tuesday on March 3, we will likely know the Democratic candidate—or at least the two finalists. This will usher in the stage when economic policy initiatives and changes to the federal government’s regulatory stance will come into play.

Columbia Threadneedle

Geopolitics continues to unnerve investors as trade wars and Brexit rumble on against the backdrop of a late-cycle economy, but secular growth trends will provide long-term opportunity regardless of whether we see slight positive or negative growth.

Deutsche Bank Wealth Management

We believe that politicians’ actions are likely to prove particularly important to the FX market in 2020. Commodities will also feel the consequences.

Deutsche Bank Wealth Management

Investors will continue to look for currencies that can act as portfolio diversifiers. The yen has played this role well over the last year and may continue to do so. Although volatility is currently relatively low and risks are (probably wrongly) perceived as “known”, spikes in global volatility will occur, with political developments a potential sentiment destabiliser. A long yen position could prove to be beneficial for many portfolios.

Deutsche Bank Wealth Management

Oil prices cannot resist the downward pressure from slowing global economic growth which will most likely have implications for demand, but political spats will cause temporary upward blips during the course of the year. Our end-2020 forecast for WTI is $54 per barrel.

Hermes Investment Management

Political fragility, protectionism, cost-inflation, and dissipating growth suggest renewed volatility.

Hermes Investment Management

Political distrust and beggar-thy-neighbor policies will continue to build. The 1930s revealed few winners from a trade war. Retaliation could eventually include a reluctant China currency-devaluation. This, alongside other factors, threatens a deflationary return to the U.S.

Hermes Investment Management

Governments will increasingly offer fiscal solutions to appease voters, and retrieve the ‘baton’ from central banks. Trump may reflate again in his election year to reattract centrist voters; Abe is taking Japan into its third decade of loosening; and the U.K. is ditching its deficit-ceiling. Even in the euro-zone, deficit-reduction and negative yields should make it easier to permit fiscal expansion.

JPMorgan Asset Management

Given the binary nature of some of the political risks, investors may wish to consider some allocation to assets in emerging Asia that are likely to benefit if trade uncertainty resolves.

JPMorgan Chase & Co.

We believe that the trade war is now abating, driven by a political interest of keeping markets on an upward trajectory going into the U.S. presidential elections.

JPMorgan Chase & Co.

Potential concerns: The U.S. politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. The Fed’s credibility might start to be questioned, earnings are overshooting the trend and rising credit concerns could come to the fore. We have consistently argued that one should not expect the next U.S. recession ahead of the presidential elections, but the odds of one might go up significantly post the event, in our view.

Lombard Odier Investment Managers

We see a potential catch-22 situation arising in 2020 as policy, economic and political dilemmas loop between each other, and create a more complicated investment landscape.

Macquarie Global Macro

The dollar will gradually deflate over the course of 2020 as U.S.-China trade tensions moderate, hard Brexit risks diminish, and global growth picks up. Towards the end of 2020, escalating U.S. political risk could deal a more severe blow, but we need to get much closer to the Presidential election before the FX consequences are felt.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Pictet Wealth Management

Due to ongoing geopolitical tensions, the risk of oil price spikes remains elevated. Nevertheless, the possibility of a possible supply overhang will be the main factor in oil markets in 2020.

PineBridge Investments

The FANGs and healthcare stocks face rising political risks, and just as they appeared immune to global economic slowing, they are unlikely to benefit much from any reacceleration. We see this large segment of global equities yielding leadership to large-cap U.S. cyclicals, value stocks, and non-U.S. equities. We are fans of stocks in Dr. KOSPI (the South Korea Composite Stock Price Index), India, Brazil, as well as Japanese and European small caps.

Robert W. Baird & Co.

2020 is shaping up to be noisy and full of political conflict and uncertainty. The best opportunity for a seasonal tailwind may be closer to the actual election if its outcome starts to come into focus.

Schroders

Political risk is likely to remain a feature of the market environment, particularly in a world where growth is scarce and unequally distributed. A re-intensification of the trade war is the most significant risk as this could lead global growth to fall below 2%.

Standard Chartered

Elections will be held in 2020 in Taiwan (January), Singapore (Q1), Korea (April) and the US (November), and the situation in Hong Kong remains on investors’ radar. As a result, we expect inflows to EM to turn more volatile in H2-2020.

State Street Global Advisors

European equity valuations are more attractive than those in North America and in emerging markets, but we are relatively neutral on European equities due to persistent political and structural uncertainty.

State Street Global Advisors

Although equity volatility is currently normalizing to historical levels, we believe that the major drivers of volatility — including geopolitical uncertainty, mounting trade risks and a widening gap between fundamentals and returns — are likely to endure in 2020. These risks could materialize as dramatic spikes in volatility, with markets repricing assets rapidly based on changes in sentiment.

TD Securities

While some of the trade war headlines might subside, we think political risk may actually be higher in 2020 due to impeachment and the election. Impeachment may energize the base of either or both parties, making the election even more difficult to call.

Unigestion

To start the year, our preference remains for growth-related assets and, more specifically, emerging market, European and Japanese equities, which have room to perform as investors seek cheaper regions now that political headwinds have eased.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Wells Fargo Investment Institute

The U.S. and other developed markets may avoid a recession in 2020. However, financial markets may only see modest upside as geopolitical risks linger and monetary policy approaches the end of its effectiveness.

Wells Fargo Securities

We expect EPS growth to muddle along in the first half, but improve in the second. Political risk likely rises in the first half, with privacy and competitive concerns making some parts of the Tech sector the “new Health Care.”

Aberdeen Standard Investments

Lingering political uncertainty will create persistent direct and sentiment-driven drags on global trade, business investment and services. U.S.-China trade tensions remain a key risk and we do not foresee a quick resolution. Korea and Taiwan are vulnerable to trade conflict centred on the technology sector; while the dispute between Japan and Korea will further disrupt the global tech supply chain.

Amundi Asset Management

New themes will emerge in emerging markets from a more fragmented world and a retreat in global trade. Investors will have to go beyond the traditional “global” EM concept and dig deeper to capture attractive opportunities and themes. Among the latter, we favor the “help yourself” countries that have strong domestic demand and are less exposed to external vulnerabilities.

Amundi Asset Management

The retreat in global trade is a major change to the structure of growth but will not lead to a full-blown recession, especially at a time when cumulative loose policies will gear up and a partial deal between the U.S. and China is in sight.

Amundi Asset Management

Monetary and fiscal combination, a theme that will become prominent next year and beyond, may extend the cycle further, and may as well strengthen the resilient domestic demand. While the noise on trade-related issues will be high, a material escalation, which could damage the U.S. economy, is unlikely, given the upcoming U.S. elections in 2020.

AXA Investment Managers

Our multi-asset team’s stance is to be more optimistic on equities from a cyclical point of view. Supportive policy and some hope of resolution on the trade war and Brexit should underpin positive sentiment in equity markets.

AXA Investment Managers

For 2020 we think actual GDP growth is unlikely to be able to exceed potential in the key economic regions. Too much damage has been done, old headwinds are still with us and new sources of uncertainty have emerged.

Bank of America

We are making a significant change to our USD-CNY profile as expectations grow of a meaningful deal between China and the U.S., although this view is not without risk. Our forecast for USD-CNY at end-2020 is now 6.85.

Bank of America

The trade war remains at the core of our macro forecasts, while of course, 2020 U.S. elections approach. We are moderately optimistic, as reflected by our expectations for higher U.S. yields and a softer dollar in both G10 and EM.

BlackRock Investment Institute

Growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in U.S.-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.

BlackRock Investment Institute

We see any fiscal support from China as limited and not delivering the countercyclical boost it has in the past. A material escalation in U.S.-China trade tensions could shift China’s fiscal policy stance. But our base case is that tensions move sideways and do not escalate.

BlackRock Investment Institute

We have upgraded our view on the quality style factor. Companies with quality characteristics such as strong balance sheets tend to be more resilient to late-cycle risks. At the same time, many large multinationals in the “quality” basket could benefit from a pause in trade tensions.

BMO Capital Markets

Stocks continue to grind higher, but with periods of elevated volatility in between as questions remain on the trade front. Our base case price target for the S&P 500 is 3,400.

BNY Mellon

Tariffs remain a core concern in emerging markets, which should push global inflation higher.

BNY Mellon

The 2020 elections will likely add volatility to equity markets for two main reasons. First, pressure to breakup Big Tech is likely only to increase and become a more bipartisan topic. Second, protectionism shall also turn into a topic championed by both sides of the aisle. The Affordable Care Act will likely receive less attention from both parties, which should be positive news for markets.

Capital Economics

Despite recent progress on trade talks between the U.S. and China, we think that most of their differences will remain unresolved. And the recovery in global GDP growth is likely to be lacklustre, with China missing out.

Capital Economics

We doubt that risk premiums will fall a lot while the outcome of the U.S. elections is unclear and because the U.S. and China won’t iron out their differences.

Capital Economics

We expect growth in the global economy to remain subdued, particularly outside the U.S. And tensions between the U.S. and China are likely to persist, despite the latest progress towards a limited trade deal. Both of those developments would probably be positive for the dollar relative to most other major currencies.

Capital Economics

The risk of the U.K. trading with the EU on WTO rules after December 2020 would limit the size of the rebound in GDP growth and the pound.

Columbia Threadneedle

The trade war remains key and could go either way. While recent noise on trade has given us reason for a more cautiously optimistic stance, we are mindful that events can take a sudden and dramatic turn, aided by the speed with which social media proclamations can spread.

Columbia Threadneedle

More generally, a risk to the upside could come in the shape of a sudden acceleration in growth. Some believe this is likely because costs to businesses are currently low, with interest or borrowing rates low, as well as commodity and specifically oil prices. Also, the trade disputes could dissipate, while governments may increase or prolong fiscal stimulus.

Columbia Threadneedle

Geopolitics continues to unnerve investors as trade wars and Brexit rumble on against the backdrop of a late-cycle economy, but secular growth trends will provide long-term opportunity regardless of whether we see slight positive or negative growth.

Deutsche Bank Wealth Management

We expect slower global economic growth in 2020 and think that there is only a limited probability of a U.S. recession. U.S. growth is forecast to slow from an estimated 2.2% in 2019 to 1.6% in 2020 and euro zone growth from 1.1% to 0.9%. China will continue to experience a soft landing, with growth slowing to 5.8% in 2020 – but much will depend on finding a more comprehensive solution to the ongoing U.S./China trade dispute.

Deutsche Bank Wealth Management

Mild yuan depreciation could be caused by China’s continuing macro slowdown and accompany any possible future setbacks in U.S./China trade talks.

Goldman Sachs

Markets have recently priced out a number of tail risks (related to Brexit, the trade war, and other geopolitical threats), but have not yet priced in sturdier global growth. As economic activity finds its footing, we see upside in a variety of cyclically sensitive assets, including emerging-market equities and breakeven inflation in the bond market, and expect cyclical sectors to outperform in equities and credit. Risky assets will, in our view, produce decent returns for the year as a whole across regions.

Goldman Sachs

There are also plenty of risks, including the trade war and the possibility that the next Congress will reverse the 2017 U.S. corporate tax cut. if the 2017 corporate tax cut were to be entirely reversed and the bill applied retroactively to the start of the year, S&P 500 earnings growth in 2021 would contract by 7%, compared with our strategists’ baseline estimate of +5%.

Hermes Investment Management

Political distrust and beggar-thy-neighbor policies will continue to build. The 1930s revealed few winners from a trade war. Retaliation could eventually include a reluctant China currency-devaluation. This, alongside other factors, threatens a deflationary return to the U.S.

JPMorgan Asset Management

Given the binary nature of some of the political risks, investors may wish to consider some allocation to assets in emerging Asia that are likely to benefit if trade uncertainty resolves.

JPMorgan Chase & Co.

We believe that the trade war is now abating, driven by a political interest of keeping markets on an upward trajectory going into the U.S. presidential elections.

JPMorgan Chase & Co.

If trade tensions ease, which we expect, the dollar could meaningfully decline.

JPMorgan Chase & Co.

EM equities have done poorly in the last two years, even worse than the U.K., and are currently languishing at relative lows. We think that this creates a good entry point, and upgrade EM to overweight, funded by reducing U.S. weight further. Potential USD peaking would help, EM are likely to benefit from a turn in global PMIs, from trade truce and from some likely pickup in China dataflow.

JPMorgan Chase & Co.

Potential concerns: The U.S. politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. The Fed’s credibility might start to be questioned, earnings are overshooting the trend and rising credit concerns could come to the fore. We have consistently argued that one should not expect the next U.S. recession ahead of the presidential elections, but the odds of one might go up significantly post the event, in our view.

JPMorgan Chase & Co.

The main risk to our view could come from U.S. trade policies, i.e., an escalation of the trade war that would inject volatility into financial markets, prevent a PMI recovery and could even cause a recession.

JPMorgan Chase & Co.

We continue to believe that U.S. recession is unlikely over the next quarters, and that the manufacturing activity downturn witnessed over the past 18 months is likely to end, partly helped by the trade truce. PMIs are expected to rebound and the positive impact from recent Fed cuts is likely to filter into the economy in the first half.

Lombard Odier Investment Managers

Major issues between the U.S. and China remain unaddressed, and the presidential elections and the impeachment inquiry are incentivizing the Trump administration to finalize a deal, in our view. we find it hard to see how tariffs could revert back to pre-trade war levels anytime soon.

Lombard Odier Investment Managers

Our base case assumes a shallow trajectory of global growth in 2020. We do not see a V-shaped recovery in global capex/business investment, despite the likely confirmation of a phase one trade deal between the U.S. and China. We see the risk of recession and a hard landing as moderate (less than 20%) over the coming 12 months, and note that the likelihood of such risks has fallen lately.

Macquarie Global Macro

The dollar will gradually deflate over the course of 2020 as U.S.-China trade tensions moderate, hard Brexit risks diminish, and global growth picks up. Towards the end of 2020, escalating U.S. political risk could deal a more severe blow, but we need to get much closer to the Presidential election before the FX consequences are felt.

Macquarie Global Macro

The biggest risk remains an escalation of the trade war. With business investment already falling in most major economies, any increase in tariffs could see business “shut up shop” ahead of the U.S. election, resulting in a significant downturn/recession in the second half of 2020.

Macquarie Global Macro

Given that global growth is currently approaching stall speed, a further escalation of trade tension could see recession talk return to center stage.

Morgan Stanley

In the U.S., fundamentals will ultimately dictate market outcomes in 2020. Rather than hitch their wagons to the index, investors should watch for rotations between styles and sectors. We expect the market to vacillate between a pro-cyclical outcome and a defensive one as data comes in and trade tensions and elections evolve. In either case, we think growth stocks could be the relative loser as the crowded source of funds.

Morgan Stanley

We expect the market to vacillate between a pro-cyclical outcome and a defensive one as data come in and trade tensions and the election evolve. In either case, we think Growth stocks could be the underperformer as the crowded source of funds. A better ex-U.S. growth outlook and cheaper valuations means we prefer ex-U.S. equities.

NatWest Markets

Trade truce skepticism, China fundamentals and an expensive REER valuation imply modest CNY downside.

NatWest Markets

The Brexit Withdrawal Agreement will be ratified in January 2020, which should boost sterling FX and gilt yields. Optimism will likely fade as trade negotiations point toward a harder Brexit.

Nordea Asset Management

We expect the contagion from low corporate and consumer confidence to spread and consumer savings to rise as this deleterious story takes hold though a U.S.-China trade deal in the first quarter 2020 should help to reverse the situation.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Northern Trust

The U S.-China trade wars and the associated risks of tariffs between other countries has now taken center stage for global investors. We think this will continue to be a headwind to growth and risk-taking as we do not expect a meaningful resolution over the foreseeable future.

Oppenheimer

The phase one agreement between the U.S. and China along with the Congressional compromise on USMCA establishes a platform from which equity markets can move higher in 2020.

Oppenheimer

We see room for higher valuations in the new year but believe significant focus will be placed on corporate earnings growth as trade war uncertainty is reduced further over the next phases of negotiations.

Oppenheimer

Among potential risks: the negotiation of complex and difficult economic issues during trade talks and the risks of either or both sides walking away from the table. We believe the cost of failure to negotiate a resolution is too great and impractical for both sides from an economic and political perspective.

Pictet Wealth Management

Accommodative monetary policies and tepid fiscal policies will help contain further worries over politics and trade and prop up growth to some extent. In these circumstances, 2020 is likely to see low returns across the main asset classes.

Pictet Wealth Management

We are neutral on global equities, seeing the U.S. elections, trade tensions and the risks to consumer spending as potential sources of volatility. But we also see volatility as an asset class to be exploited.

PineBridge Investments

A plateauing of trade hostilities, instead of outright reversals, is enough to halt the decline in corporate confidence and investment.

PineBridge Investments

Given plateauing trade frictions, and an upswing in cash flows, rotation within the liquidity pool away from the overcrowded safety trades should result in a 1.75% to 2.25% range for the U.S. 10-year yield. If trade hostilities are rolled back at all, we should see 2% to 2.5% throughout 2020.

Principal Global Investors

Emerging market debt valuations appear more attractive relative to developed market debt. Emerging Asia stands to gain the most from an easing of U.S./China trade tensions.

Principal Global Investors

A U.S./China trade resolution, even just a partial deal which stops further tariffs, will reinforce the wealth of China’s stimulus measures introduced over the past year, stabilizing the economy and thereby lifting the emerging Asia region.

Principal Global Investors

Global growth appears to be stabilizing and should start a shallow recovery in the first quarter of 2020, while global investor sentiment is being supported by expectations for a likely reprieve in trade tensions, setting the scene for a more constructive year for emerging markets.

Principal Global Investors

In equities, we believe it is prudent to have a core allocation to U.S. mega cap stocks which should prove more resilient than large cap peers to late cycle shocks, and focus on those companies with demonstrably strong balance sheet quality. At the same time, we favor building a tactical allocation to value stocks given the potential upside available—in particular, in financials which have robust balance sheets and are well positioned to benefit from a hiatus in Brexit uncertainty and de-escalation in trade tensions.

RBC Wealth Management

Despite turbulent intraday swings in 2020, RBC Capital Markets expects WTI crude oil to trade between $50 and $60 per barrel over the next 12-18 months, capped by excess global supply and slowing demand growth. U.S.-China trade uncertainty and a further deceleration in global manufacturing would impede any significant rally in copper. Gold to consolidate as less monetary easing.

Robeco

We believe the things that made financial headlines in 2019 – Brexit and trade wars – to be less prominent in 2020.

Schroders

Political risk is likely to remain a feature of the market environment, particularly in a world where growth is scarce and unequally distributed. A re-intensification of the trade war is the most significant risk as this could lead global growth to fall below 2%.

Societe Generale

The de-escalation of two extreme risks for the global markets, the trade war and a no-deal Brexit, and its positive consequences on the real economy, will probably be the most important market driver in the early part of 2020. Relief on those two fronts could lead to further reallocation from bonds to equities, and reinvestment in Asia ex China, helping Japan equities but not the yen. Receding fears on the yuan could temporarily help the rest of Asia.

Standard Chartered

2019 has been the year of the bond, and 2020 could be the year of the buck: As global risk sentiment has improved, we believe the stars are aligned for the dollar to weaken. EM currencies should benefit from trade war de-escalation and improving global liquidity. Idiosyncratic factors may limit dollar weakness, however, and the risk is that Asian currency markets excluding Japan have already priced in the recovery in exports.

Standard Chartered

Sentiment in commodity markets has been heavily influenced by external factors such as U.S.-China trade tensions. Prices in many markets have improved recently, but further gains in 2020 could be constrained by U.S. protectionism. Copper continues to be viewed as a proxy for global growth. Oil market fundamentals appear balanced. Nickel and palladium have been the most resilient to global trade tensions. We view near-term price weakness as a long-term buying opportunity for gold.

Standard Chartered

China’s economy should find some stability from reduced trade tensions with the U.S., but deflation risks remain due to the weakness in PPI.

Standard Chartered

We remain near-term neutral on Treasuries but positive for 2020 overall. The Fed’s insurance cuts may extend the expansion, but only temporarily. A post-deal China may resume Treasury purchases; Japan is already buying.

State Street Global Advisors

Although equity volatility is currently normalizing to historical levels, we believe that the major drivers of volatility — including geopolitical uncertainty, mounting trade risks and a widening gap between fundamentals and returns — are likely to endure in 2020. These risks could materialize as dramatic spikes in volatility, with markets repricing assets rapidly based on changes in sentiment.

State Street Global Advisors

In the coming year, we believe continued central bank support will warrant an overweight to equities. This generally positive outlook is tempered, however, by increasingly stretched valuations as fundamentals disconnect from returns. This disconnect, combined with persistent trade risk and the prospect of recurrent bouts of volatility, will lead us to maintain a defensive posture in our equity allocations.

State Street Global Advisors

Currency volatility is currently relatively tame, but investors should take care not to be lulled into complacency by low volatility; stretched currency valuations signal the potential for big moves ahead. The dollar is expensive but awaiting a catalyst for reversion. A key potential catalyst would be progress toward resolution of trade tensions — or at least greater certainty regarding trade matters.

TD Securities

While some of the trade war headlines might subside, we think political risk may actually be higher in 2020 due to impeachment and the election. Impeachment may energize the base of either or both parties, making the election even more difficult to call.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Vanguard

In the U.K., Vanguard sees growth of 1.2% next year, assuming the country secures an orderly withdrawal deal In the euro zone, growth is likely to remain weak at around 1% in 2020, due to the trade environment, and the drag from Brexit. U.S. growth is forecast to decelerate to around 1% in 2020, avoiding a technical recession but below normal trend growth of 2%. China too is expected to slow to a below-trend pace of 5.8% in 2020 – beneath its own 6% target. The picture for emerging markets is mixed.

Wells Fargo Investment Institute

We believe U.S. elections, the strategic conflict with China, and the degree of moderation in the U.S./global economic growth outlook will be the biggest drivers for markets in 2020.

Amundi Asset Management

The path for investors might not be linear. In the short term, market expectations for policy actions have gone too far and need to adjust. The adjustment process will drive volatility in bonds, with a bottoming out of core bond yields already started, and rerating in some expensive defensive sectors in equity. On the dollar, the U.S. yield advantage should prevent a major dollar sell-off in 2020. In terms of currencies management, we believe that a slight depreciation of the dollar is the most likely outcome, but this would be enough to restore some confidence in selective EM currencies, for which pessimism is overdone.

Amundi Asset Management

Volatility has been constrained by the proliferation of some investment strategies (i.e. selling volatility to get the premium), but as market expectations adjust, volatility spikes are likely. We have entered a phase in which it is not the average level of volatility that matters, but the fact that markets will shift from quiet phases to periods of high volatility. To volatility-proof their portfolios, investors should consider liquid alternative strategies that offer low correlation vs traditional asset classes, and volatility strategies.

AXA Investment Managers

Looking ahead, elements of risk in fixed income such as low volatility, negative-term premia, liquidity risk, are likely to affect performance in the rates markets.

AXA Investment Managers

We should not rule out possible bouts of bond market volatility. Given the low-yield environment, we favour strategies that limit volatility, focus on income returns and/or are diversified and flexible enough to generate steady returns through active allocation.

AXA Investment Managers

Short-duration strategies have a strong track record of limited downside participation in bear markets, while matching a good part of the upside when markets perform well. This is especially the case in the higher beta parts of the market like high yield and emerging market debt. In our view, these strategies seem well suited to the current market outlook.

Barclays

Despite our forecasts for stability, substantive risk that could radically change the FX outlook leads us to conclude that G10 FX vol, particularly at lower deltas, is too cheap.

BMO Capital Markets

Stocks continue to grind higher, but with periods of elevated volatility in between as questions remain on the trade front. Our base case price target for the S&P 500 is 3,400.

BMO Capital Markets

Looking ahead to 2020, we are not ruling out the possibility of some sort of market pullback or correction. In fact, as we have stated many times in our previous reports, we expect that heightened uncertainty among investors is here to stay, and will lead to elevated levels of volatility in the upcoming year. However, we do not anticipate that this price drawdown—if it does in fact occur—will be as severe as many investors and market pundits appear to be portraying.

BNY Mellon

Historically low currency volatility has vexed FX investors for the past few years. Yield curve flattening and rates compression, as well as stable long-term fundamentals have conspired to reduce FX spot ranges. For FX volatility to pick up in 2020, we would need to see meaningful policy or real economic divergence.

BNY Mellon

The 2020 elections will likely add volatility to equity markets for two main reasons. First, pressure to breakup Big Tech is likely only to increase and become a more bipartisan topic. Second, protectionism shall also turn into a topic championed by both sides of the aisle. The Affordable Care Act will likely receive less attention from both parties, which should be positive news for markets.

Citi

Leading economic indicators like the brief inversion of the yield curve and some tightening in credit conditions for commercial and industrial firms point to the potential for some economic weakness in the second half of 2020. Combined with concerns about a potential change in tax policy and tighter business regulation should the White House flip, this could lead to some market volatility in the back half of 2020.

Columbia Threadneedle

There is a wide dispersion of potential outcomes in 2020 that warrants us making smaller allocation tilts than we have done earlier on in the cycle, not least because late-cycle phases generally exhibit increased volatility. With that in mind, diversification should be prioritized amid the continued and significant uncertainty.

Deutsche Bank Wealth Management

Investors will continue to look for currencies that can act as portfolio diversifiers. The yen has played this role well over the last year and may continue to do so. Although volatility is currently relatively low and risks are (probably wrongly) perceived as “known”, spikes in global volatility will occur, with political developments a potential sentiment destabiliser. A long yen position could prove to be beneficial for many portfolios.

Deutsche Bank Wealth Management

A sense of continued policy uncertainty, combined with growth fears, high valuations for equities and lackluster earnings growth will tend to boost volatility.

Hermes Investment Management

There are few reasons to believe 2020 will either be low volatility (in light of macro risks) or free from defaults, but if we are mindful of those we feel confident that a good year lies ahead. In traditional Fixed Income style we also hold out a little hope that the correction that is probably long overdue will begin to arrive in 2020!

Hermes Investment Management

Political fragility, protectionism, cost-inflation, and dissipating growth suggest renewed volatility.

JPMorgan Chase & Co.

The median VIX will be realized with the most prevalent reading of ~12 and likely one or two bouts of volatility into a 15-25 range. As such, we think that the outlook for short volatility strategies is only marginally better than last year.

JPMorgan Chase & Co.

The market turmoil and economic slowdown over the past 18 months is not marking the end of the business cycle, but rather represents a reset similar to crises that occurred every three years after 2008 (2011/2012, 2015/2016, and 2018/2019).

JPMorgan Chase & Co.

The main risk to our view could come from U.S. trade policies, i.e., an escalation of the trade war that would inject volatility into financial markets, prevent a PMI recovery and could even cause a recession.

Lombard Odier Investment Managers

Balanced, global convertible bond strategies stand to benefit from an expected return of equity volatility and risk assets in 2020.

Pictet Wealth Management

Investors can play potential increases in market volatility to their advantage. But this also means the time is ripe to build protection in the form of options and to forestall future dollar weakness by buying gold.

Pictet Wealth Management

We are neutral on global equities, seeing the U.S. elections, trade tensions and the risks to consumer spending as potential sources of volatility. But we also see volatility as an asset class to be exploited.

Principal Global Investors

This record-high equity market will likely remain range-bound but also occasionally be ravaged by bouts of volatility as stocks react more sharply to corporate, political, and economic news. Large cap momentum stocks, which have not quite reached the multinational mega-cap level, could find themselves most vulnerable to these top-of-market wobbles.

RBC Wealth Management

Our view for 2020 features moderate equity returns and earnings growth. Valuations in North America are not outlandish, while in Europe and Japan they are cheap. Alongside this, we see a continued need for vigilance given that the late-cycle economic phase brings with it particular challenges and often generates market volatility.

Robeco

We expect Trump to remain U.S. president after the elections because the incumbent party tends to win whenever the economy is improving. We acknowledge, however, that the way to that victory is likely to be volatile.

Robert W. Baird & Co.

Our outlook suggests the upward trajectory for stocks (at home and around the world) is likely to continue in 2020, though the volatility-free environment of 2016-2017 may be too much to expect at this point.

Robert W. Baird & Co.

Volatility remains elevated but the S&P 500 finishes the year with gains in the mid-single-digits. Stock market leadership moves away from the S&P 500, with better opportunities being found overseas and in the mid-cap and small-cap spaces.

Schroders

The absence of a more emphatic global recovery prevents us from significantly rotating our investments. Low cash rates suppress economic and financial volatility and compel us to stay invested. We continue to tread a careful line between benefiting from the liquidity environment without exposing ourselves to too much economic risk.

Societe Generale

Our economic team still forecasts a short and shallow recession in the U.S. by the summer, which clearly prevents us from being optimistic on equities. However, our economists now see fewer downside risks to their scenario, which leaves the door open to a balanced allocation (45% equities, 45% bonds) with a high degree of volatility control.

Standard Chartered

Elections will be held in 2020 in Taiwan (January), Singapore (Q1), Korea (April) and the US (November), and the situation in Hong Kong remains on investors’ radar. As a result, we expect inflows to EM to turn more volatile in H2-2020.

State Street Global Advisors

Although we believe that the structural trend is toward lower rates, the news and economic cycle will introduce volatility to the trend, creating opportunities to trade this range.

State Street Global Advisors

Managed volatility and defensive equity strategies may offer substantial benefits in this environment. Both strategies allow investors to remain fully invested in the equity market and continue to benefit to from potential upside.

State Street Global Advisors

Currency volatility is currently relatively tame, but investors should take care not to be lulled into complacency by low volatility; stretched currency valuations signal the potential for big moves ahead. The dollar is expensive but awaiting a catalyst for reversion. A key potential catalyst would be progress toward resolution of trade tensions — or at least greater certainty regarding trade matters.

State Street Global Advisors

In the coming year, we believe continued central bank support will warrant an overweight to equities. This generally positive outlook is tempered, however, by increasingly stretched valuations as fundamentals disconnect from returns. This disconnect, combined with persistent trade risk and the prospect of recurrent bouts of volatility, will lead us to maintain a defensive posture in our equity allocations.

State Street Global Advisors

Although equity volatility is currently normalizing to historical levels, we believe that the major drivers of volatility — including geopolitical uncertainty, mounting trade risks and a widening gap between fundamentals and returns — are likely to endure in 2020. These risks could materialize as dramatic spikes in volatility, with markets repricing assets rapidly based on changes in sentiment.

TD Securities

Markets typically struggle to price in election risks due to inherent binary risks. We expect realized equity and rate vol to remain high as investors parse through the two agendas relating to tax policy, regulation, fiscal spending, and trade policy.

Unigestion

We also favor diversifying carry strategies in FX, credit and volatility. Conversely, we are staying away from real assets and government bonds. Real assets will be penalized by the lack of inflationary pressures, while government bonds will suffer from a macroeconomic stabilization.

Vanguard

Global growth is set to slow further in 2020, weighed down by the U.S.-China trade standoff and continued political uncertainty. Investors should expect lower economic growth and periodic bouts of volatility in the near term, given political risk, persistent threats to growth, and high asset prices.

Wells Fargo Securities

Heading into 2020, investors need to be prepared for a more volatile equity market. With the VIX around 12 and IG credit spreads around 100 basis points, we see material scope for an upward move. A 10% stock market correction in the first half is possible; we can envision one in late March/early April when the Fed’s balance sheet possibly stops growing

Wells Fargo Securities

If our assessment is right – i.e., much of the juice has been squeezed from the capital markets – stock returns will be more modest with higher volatility and by definition stocks have a less attractive risk/reward.

Amundi Asset Management

To safeguard investors’ interests in a world flooded by debt, sustainability (of corporate balance sheets or of fiscal paths in emerging markets – EM) must be a key driver of selection now, as fundamentals have already started to deteriorate.

Amundi Asset Management

Income and opportunities from rotation towards neglected areas will be the equity 2020 story. The lack of strong directional trends in the markets, and weak earnings growth should drive investors to search for areas of resilience in the equity income/dividend space. Once the outlook stabilizes, and yields bottom out (PMI – purchase managers index - rebound expected in the first half, some fiscal expansion gears up later on), there could be some potential for rotation in areas of attractive valuations. Cyclical stocks (quality in Europe and value in U.S.) and small caps would present opportunities to exploit throughout the year.

AXA Investment Managers

Our leading earnings indicators suggest that earnings growth momentum is starting to trough and is likely to pick up in the second half of 2020. We keep a constructive stance on equities moving into 2020, with a bias towards undervalued cyclical plays in our allocation.

Barclays

With corporate earnings growth likely to be subdued (if positive) next year in both the U.S. and Europe, so should equity returns. Yet we still prefer global equities over fixed income, given how little upside there is left in the bond markets. A slow grind higher in risk assets seems the path of least resistance.

Barclays

The outlook for equities is a bit more promising. Although equities do not look cheap, there remains room for them to become more expensive in an environment of punishingly low returns on core fixed income. We also think some improvement in the economic outlook sets the stage for modest growth in corporate earnings. These are weak drivers of equity market performance compared with the early stages of an economic recovery. But with fixed income as unappetizing as it is, no very strong driver is required to generate outperformance by equities; a trend-like expansion is likely to do the trick.

Barclays

Although our forecast is for subdued growth in earnings (roughly 5% in the euro area and 2% in the U.S.), this should be adequate to secure solid outperformance for stocks over bonds.

BlackRock Investment Institute

We have upgraded our view on the quality style factor. Companies with quality characteristics such as strong balance sheets tend to be more resilient to late-cycle risks. At the same time, many large multinationals in the “quality” basket could benefit from a pause in trade tensions.

BMO Capital Markets

We made a prediction in 2010, that U.S. stocks were likely entering a 20-year secular bull market. We are sticking with that call. Many of the same core principles remain in place, namely U.S. corporate superiority in terms of earnings stability, cash flow, innovation, product and services, and company management. A 15% annual return akin to the first 10 years of the bull will undoubtedly be more difficult to match considering that emerging markets, Europe and commodities will likely come into favor again at some point. However, we believe that a leadership shift that many investors have been hoping and praying for is at least a few years away.

BMO Capital Markets

Earnings growth for the broader market is slated to improve in 2020, which has historically benefited value performance. Given the longer-term outperformance cycles of value relative to growth, we believe the market may soon be entering the very early stages of a “value cycle”.

BMO Capital Markets

While the sharp rebound in earnings growth for small and mid-caps are expected to eclipse that of large caps, we continue to believe large cap stocks offer more stable fundamentals overall especially given the increasingly volatile market environment.

BMO Capital Markets

We believe a barbell approach to equity investing is warranted with high quality growth exposure on the “aggressive” side of the barbell and high quality dividend-paying stocks on the “defensive” side.

Capital Economics

Corporate earnings in the U.S. in particular will struggle to live up to investors’ expectations. The upshot is that we expect equities in the U.S. to tread water and underperform those elsewhere over the next couple of years.

Credit Suisse

Our 2020 S&P 500 price target is 3,425. These estimates imply EPS growth of 5.2% next year, a substantial improvement from 2019’s 1% expected increase. We project forward multiples to expand to 18.9x by year-end 2020 from 18.1x currently.

Deutsche Bank Wealth Management

A sense of continued policy uncertainty, combined with growth fears, high valuations for equities and lackluster earnings growth will tend to boost volatility.

Evercore ISI

Stable growth and reduced uncertainty will push revenue growth higher, while low borrowing costs, modest wage growth and the reduced importance of commodity prices will leave profitability elevated.

Evercore ISI

Our top down approach suggest 6% revenue growth and 8.5% earnings growth supported by a more than 3% reduction in shares outstanding through buybacks. S&P 500 target: 3,400 (+9.5%) with 19x Trailing PE. High cash generation and return along with easing capex spending will support share buybacks and dividend growth, leaving equities attractively priced relative to cash return.

Evercore ISI

The outlook for growth and risk assets has improved. Global economic activity, though still stuck in low gear, has started to firm. Earnings growth is set to re-accelerate. Global central banks remain dedicated to reaching their still elusive inflation targets, in part by maintaining asset-friendly financial conditions.

Fidelity International

Earnings are likely to bottom out and then recover: after a flat year in 2019, earnings growth is projected to be around 8% in 2020.

Fidelity International

The world will avoid a global recession in 2020. The earnings outlook is improving, but U.S. election risk remains high.

Goldman Sachs

In the U.S. equity market, our strategists remain neutral on the balance sheet quality theme; a view that is partly predicated on valuations. But over longer horizons, they continue to think near-record corporate leverage, slowing earnings growth, and secular growth characteristics make strong balance sheet stocks attractive for longer-term investors or as a tail risk hedge.

Goldman Sachs

While earnings growth is likely to rebound in 2020, the forward trajectory will be much flatter by post-crisis norms, as profits adjust to a new reality where growth in unit labor costs outpaces price inflation.

Goldman Sachs

Risky assets benefited from central bank easing in 2019, but now growth will need to drive returns. We expect moderately better economic and earnings growth, and therefore decent risky asset returns. But we also see plenty of risks, and more challenging valuations, so the upside is limited.

Goldman Sachs

There are also plenty of risks, including the trade war and the possibility that the next Congress will reverse the 2017 U.S. corporate tax cut. if the 2017 corporate tax cut were to be entirely reversed and the bill applied retroactively to the start of the year, S&P 500 earnings growth in 2021 would contract by 7%, compared with our strategists’ baseline estimate of +5%.

JPMorgan Asset Management

Risk assets had an optimistic 2019, but stagnating earnings growth means valuations now look less supportive. Given pressure on margins, we struggle to see a significant reacceleration in earnings growth in 2020.

JPMorgan Chase & Co.

We continue to see potential for some further P/E rerating from here, which typically happens into the cycle peak. Earnings growth in 2020 is unlikely to be as strong as consensus projects, but we do not see that as a major obstacle, as long as earnings momentum is bottoming out.

Lombard Odier Investment Managers

Adopting a constructive stance on credit, we favor crossover issuers, as well as moving down the capital structure of high quality companies.

Morgan Stanley

Easier monetary policy and trade stabilization will help global growth accelerate, but only stabilize GDP growth in the U.S. at 1.8%, leaving pressure on corporate margins from tight labor markets.

NatWest Markets

Supply net of QE from governments will fall by around 100 billion euros to 740 billion euros. But corporate supply may continue its expansion, fueled by a compelling equity

Oppenheimer

We see room for higher valuations in the new year but believe significant focus will be placed on corporate earnings growth as trade war uncertainty is reduced further over the next phases of negotiations.

Oxford Economics

We believe U.S. equities are unlikely to make much headway in 2020, with risks skewed to the downside. Earnings are currently contracting, and consensus expectations for a sharp, V-shaped recovery in 2020 appear too optimistic in an environment of still-sluggish global growth and weak corporate pricing power.

Pictet Wealth Management

The steep decline in earnings growth is bottoming out, and emerging-market debt could continue to perform if the dollar weakens, as we expect.

PineBridge Investments

A plateauing of trade hostilities, instead of outright reversals, is enough to halt the decline in corporate confidence and investment.

Principal Global Investors

In equities, we believe it is prudent to have a core allocation to U.S. mega cap stocks which should prove more resilient than large cap peers to late cycle shocks, and focus on those companies with demonstrably strong balance sheet quality. At the same time, we favor building a tactical allocation to value stocks given the potential upside available—in particular, in financials which have robust balance sheets and are well positioned to benefit from a hiatus in Brexit uncertainty and de-escalation in trade tensions.

Principal Global Investors

2020 could be the year that “equities vertigo” begins to kick in. Persistent central bank liquidity will continue to fuel stocks. But diminishing monetary effectiveness means this will be delivered via multiple expansion, not earnings growth.

RBC Wealth Management

Our view for 2020 features moderate equity returns and earnings growth. Valuations in North America are not outlandish, while in Europe and Japan they are cheap. Alongside this, we see a continued need for vigilance given that the late-cycle economic phase brings with it particular challenges and often generates market volatility.

Robert W. Baird & Co.

Expectations are that earnings growth will rebound in 2020, though current estimates may prove to be too robust. One thing working against profits right now is that labor costs are rising at a faster pace than pricing. This downside to low inflation is a negative for profits – and it should not be overlooked that the broadest measures of corporate profits have not gone anywhere for five years.

Schroders

We believe equities are attractive relative to so-called safe havens, like government bonds, but earnings growth is required to deliver further gains.

Schroders

We believe that the market’s expectations for U.S. earnings may be optimistic—reflected in higher valuations—as profit margins are likely to be eroded by rising costs. There is the potential for earnings to exceed expectations in the rest of the world, however, leading us to expect high single-digit returns from equities (shares).

Schroders

The impact of a more left-leaning U.S. government would have a muted impact on our growth forecasts, but would impact the corporate earnings outlook in the U.S.

Schroders

There is potential for moderate dollar weakness; this generally equates to EM currency appreciation and is positive both for financial conditions in EM, and for local earnings translation into dollars.

Schroders

The balance of risks looks favorable for EM equities in 2020. Valuations are reasonable and earnings expectations for 2020 could be met.

Standard Chartered

We believe the dollar strength of previous years will continue to weigh on U.S. corporate profits, leaving the U.S. consumer vulnerable to corporate cost-cutting and job cuts.

State Street Global Advisors

Stimulative central bank activity should reap benefits, including keeping GDP growth near its potential. The result should be a favorable backdrop for corporate issuers, who should see fairly stable ratings. Corporate bond holders across the spectrum (investment grade through high yield) will see additional benefit through improved market technicals: Issuance is trending lower and ECB purchases will drive prices up

Wells Fargo Securities

We expect EPS growth to muddle along in the first half, but improve in the second. Political risk likely rises in the first half, with privacy and competitive concerns making some parts of the Tech sector the “new Health Care.”

Wells Fargo Securities

History and fundamentals suggests aggressive multiple expansion or EPS growth is not in the works for a melt-up and the economy isn’t bad enough to signal melt-down.

AXA Investment Managers

Our multi-asset team’s stance is to be more optimistic on equities from a cyclical point of view. Supportive policy and some hope of resolution on the trade war and Brexit should underpin positive sentiment in equity markets.

AXA Investment Managers

Where there is scope for some upward revision to growth, e.g. Germany and China in an improved global manufacturing scenario, or the UK post a soft-Brexit deal, we could see an improvement in relative equity market performance.

Macquarie Global Macro

The dollar will gradually deflate over the course of 2020 as U.S.-China trade tensions moderate, hard Brexit risks diminish, and global growth picks up. Towards the end of 2020, escalating U.S. political risk could deal a more severe blow, but we need to get much closer to the Presidential election before the FX consequences are felt.

Morgan Stanley

Europe is the only market where strategists see multiple expansion for equities. Several contributing factors, including less uncertainty around Brexit, asset allocation decisions away from negative-yielding bonds and global investor base that is under-indexed to Europe may all boost demand for European stocks.

NatWest Markets

The Brexit Withdrawal Agreement will be ratified in January 2020, which should boost sterling FX and gilt yields. Optimism will likely fade as trade negotiations point toward a harder Brexit.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Principal Global Investors

In equities, we believe it is prudent to have a core allocation to U.S. mega cap stocks which should prove more resilient than large cap peers to late cycle shocks, and focus on those companies with demonstrably strong balance sheet quality. At the same time, we favor building a tactical allocation to value stocks given the potential upside available—in particular, in financials which have robust balance sheets and are well positioned to benefit from a hiatus in Brexit uncertainty and de-escalation in trade tensions.

Robeco

We believe the things that made financial headlines in 2019 – Brexit and trade wars – to be less prominent in 2020.

Societe Generale

The de-escalation of two extreme risks for the global markets, the trade war and a no-deal Brexit, and its positive consequences on the real economy, will probably be the most important market driver in the early part of 2020. Relief on those two fronts could lead to further reallocation from bonds to equities, and reinvestment in Asia ex China, helping Japan equities but not the yen. Receding fears on the yuan could temporarily help the rest of Asia.

Vanguard

In the U.K., Vanguard sees growth of 1.2% next year, assuming the country secures an orderly withdrawal deal In the euro zone, growth is likely to remain weak at around 1% in 2020, due to the trade environment, and the drag from Brexit. U.S. growth is forecast to decelerate to around 1% in 2020, avoiding a technical recession but below normal trend growth of 2%. China too is expected to slow to a below-trend pace of 5.8% in 2020 – beneath its own 6% target. The picture for emerging markets is mixed.

AXA Investment Managers

With risks facing the global economy moderating at the moment and interest rates remaining very low, we keep a constructive stance on equities moving into 2020, with a bias towards undervalued cyclical plays in the U.S., and towards select high dividend yield exposure with adequate free cash flow cover in the euro area.

BlackRock Investment Institute

The main risk to our outlook is a gradual change in the macro regime. One such risk: Growth flatlines as inflation rises. This might pressure the negative correlation between stock and bond returns over time, reducing the diversification properties of bonds.

BlackRock Investment Institute

Risks are are tilted downward for growth because any renewed escalation of trade tensions could derail the growth uptick we expect. Inflation, by contrast, could surprise to the upside, particularly in the U.S.

BlackRock Investment Institute

We see any fiscal support from China as limited and not delivering the countercyclical boost it has in the past. A material escalation in U.S.-China trade tensions could shift China’s fiscal policy stance. But our base case is that tensions move sideways and do not escalate.

BMO Capital Markets

Looking ahead to 2020, we are not ruling out the possibility of some sort of market pullback or correction. In fact, as we have stated many times in our previous reports, we expect that heightened uncertainty among investors is here to stay, and will lead to elevated levels of volatility in the upcoming year. However, we do not anticipate that this price drawdown—if it does in fact occur—will be as severe as many investors and market pundits appear to be portraying.

BNP Paribas Asset Management

Our base case is vulnerable to a more entrenched “synchronised slowdown” or a sustained “reflation” environment. Fixed income markets are most at risk from sustained move to reflation.

Capital Economics

The risk of the U.K. trading with the EU on WTO rules after December 2020 would limit the size of the rebound in GDP growth and the pound.

Capital Economics

Though not our central forecast, a Sanders or Warren victory in the U.S. election is a significant risk to equities there in particular.

Citi

Risks may still be tilted to the downside, but we are not forecasting a global (or U.S.) recession in 2020. Citi’s economists think that global growth will settle in around 2.7% year-on-year in both 2020 and 2021 as global manufacturing activity rebounds.

Columbia Threadneedle

The trade war remains key and could go either way. While recent noise on trade has given us reason for a more cautiously optimistic stance, we are mindful that events can take a sudden and dramatic turn, aided by the speed with which social media proclamations can spread.

Columbia Threadneedle

More generally, a risk to the upside could come in the shape of a sudden acceleration in growth. Some believe this is likely because costs to businesses are currently low, with interest or borrowing rates low, as well as commodity and specifically oil prices. Also, the trade disputes could dissipate, while governments may increase or prolong fiscal stimulus.

Evercore ISI

The year ahead is not without risks – the ongoing trade war, the U.S. presidential election, China’s deleveraging – but we forecast another strong year for equities (+9.5%), led by a rebound in Cyclical sectors and risk-on factors.

Fidelity International

The key risk for 2020 is that central bank policy fails to generate growth, governments shrink from fiscal stimulus and the global economy plunges into recession.

Fidelity International

Another key risk for markets is the outcome of the U.S. election. If Elizabeth Warren is chosen as the Democratic frontrunner and the impeachment process overwhelms Donald Trump, the share prices of U.S. corporates could take a hit. Private capital too is likely to be a target for Warren, given her focus on corporate taxes.

Goldman Sachs

There are also plenty of risks, including the trade war and the possibility that the next Congress will reverse the 2017 U.S. corporate tax cut. if the 2017 corporate tax cut were to be entirely reversed and the bill applied retroactively to the start of the year, S&P 500 earnings growth in 2021 would contract by 7%, compared with our strategists’ baseline estimate of +5%.

Goldman Sachs

Risky assets benefited from central bank easing in 2019, but now growth will need to drive returns. We expect moderately better economic and earnings growth, and therefore decent risky asset returns. But we also see plenty of risks, and more challenging valuations, so the upside is limited.

JPMorgan Chase & Co.

The main risk to our view could come from U.S. trade policies, i.e., an escalation of the trade war that would inject volatility into financial markets, prevent a PMI recovery and could even cause a recession.

Lombard Odier Investment Managers

The U.S. presidential race is likely to tighten as we traverse through 2020 – thus shaping up to be a major risk for assets, especially if Elizabeth Warren becomes the Democratic front-runner.

Macquarie Global Macro

The biggest risk remains an escalation of the trade war. With business investment already falling in most major economies, any increase in tariffs could see business “shut up shop” ahead of the U.S. election, resulting in a significant downturn/recession in the second half of 2020.

Northern Trust

We expect markets to focus on the tensions between organic economic growth in most economies and the risks associated with political uncertainties, such as the U.S.-China trade war, Brexit, and the 2020 U.S. election.

Oppenheimer

Among potential risks: the negotiation of complex and difficult economic issues during trade talks and the risks of either or both sides walking away from the table. We believe the cost of failure to negotiate a resolution is too great and impractical for both sides from an economic and political perspective.

Oxford Economics

Our baseline doesn’t feature a recession in the near future, but the lingering industrial slump is increasingly at risk of spilling over into the broader economy. In our recession scenario, increased trade protectionism, weakening corporate earnings and declining private sector confidence lead to a prolonged industrial slump and force consumers and businesses to retrench. Real GDP contracts in mid-2020, led by a 4% pullback in investment and a 15% tumble in U.S. stock prices.

RBC Wealth Management

With some recessionary indicators flashing caution, RBC Wealth Management’s house view has become less tolerant of portfolios carrying an overweight or above target commitment to stocks. Investors should not be complacent.

Robeco

A >20% fall of the equity markets is not unthinkable if things do turn sour.

Schroders

Political risk is likely to remain a feature of the market environment, particularly in a world where growth is scarce and unequally distributed. A re-intensification of the trade war is the most significant risk as this could lead global growth to fall below 2%.

State Street Global Advisors

The possibility of a less favorable economic outcome remains a risk. Therefore, in 2020 we favor more defensive positioning in our overweight to credit: shifting away from cyclical areas such as autos and retail, and favoring staples such as telecommunications. Similarly, we think it will be wise to be judicious with allocations to lower-grade credit.

UBS

The upside risk is that just as 2017’s strength was exaggerated, 2019’s tariff hit could have been similarly made worse by a perfect storm of falling car demand, a weak tech cycle, soft shale production and tight financial conditions in China and India. Some of these factors may organically improve and lift global growth towards trend.

Wells Fargo Investment Institute

The risk of a sharp move in the U.S. dollar or in global economic growth remains uncommonly elevated.

Wells Fargo Securities

One of our biggest worries is interest rate risk/volatility. Interest rates are becoming less negative in Europe, and if this trend continues we would expect a material lift in U.S. rates. This would likely have a spillover effect and cause an aggressive valuation-multiple adjustment in equities. Conversely, another spate of bad news could bring interest rates lower, and talk of negative rates in the U.S. could arise again (as occurred in August). In our view this would also cause an aggressive contraction of the market multiple.

Aberdeen Standard Investments

For investors who are able to bear illiquidity risk, private market assets which are uncorrelated with equity volatility, such as private equity, private debt, infrastructure and real estate, offer diversification benefits to portfolios and significantly higher returns potential than public markets. We particularly favour infrastructure

Amundi Asset Management

We are positive on euro IG, particularly on BBB-rated debt and financials. Strong technicals are here to stay. However, liquidity conditions in the secondary market remain a key area to monitor.

Amundi Asset Management

Instead of fearing a global recession, investors should focus on adjusting the portfolio exposure to the de-globalization trend. They should also prepare for a mature and extended credit cycle, with higher liquidity risks due to more stringent regulations post-2008 crisis.

Amundi Asset Management

U.S. corporate bonds are supported by favorable technicals, though not to the same extent as euro IG, as CSPP and negative rates are a European peculiarity. However, given lingering macro uncertainties, we prefer to keep a cautious attitude on credit risk, favouring high quality carry and increasing the focus on liquidity assessment.

Standard Chartered

2019 has been the year of the bond, and 2020 could be the year of the buck: As global risk sentiment has improved, we believe the stars are aligned for the dollar to weaken. EM currencies should benefit from trade war de-escalation and improving global liquidity. Idiosyncratic factors may limit dollar weakness, however, and the risk is that Asian currency markets excluding Japan have already priced in the recovery in exports.