We’re Moving On Up
(Link to the full report is available HERE)
A much more challenging outlook faces investors at the start of 2019 than a year ago.
The U.S. tax cuts are now fully baked in and no longer a tailwind for the U.S. economy. Purchasing Manager Index readings are decelerating globally with the U.S. PMI reading in December for both the manufacturing and services sectors moving lower.
The trade war and debt issues are creating stress in China’s economy, an important engine of world growth. The debt situation globally is a major overhang and could become a bigger risk should the global growth outlook worsen.
U.S. investors experienced a decade of above average returns and one of the longest periods of sustained economic growth (albeit low growth) on record, in large part due to central bank policy decisions.
However, 2018 marked a major turn in central bank liquidity support, which had a tremendously positive impact on financial asset returns over the past decade.
The preponderance of evidence suggests we are closer to the end of the current economic up cycle.
From here, a prudent investor should consider a George and Wheezy type move in their investment portfolio. Moving
on up the quality curve in both stocks and bonds will offer some (but not total) protection against more adverse outcomes.
A cautious approach is easily justified and there “ain’t nothing wrong” with that so consider moving on up.
PLEASE NOTE: ABSOLUTELY NOTHING IN THIS ARTICLE SHOULD BE CONSIDERED AS INVESTMENT ADVICE OR RECOMMENDATION REGARDING THE SUITABILITY OF ANY INVESTMENT. FOR MORE INFORMATION PLEASE REFER TO DISCLOSURES.