Jason Draho, Head of Asset Allocation at UBS, and John Tousley, Head of Global Markets Strategy at Goldman Sachs Asset Management, discuss their outlooks for 2020:
• Both believe global PMIs and labour market data have bottomed. They expect a global expansion with US growth at 2% and global growth at 3.5%.
• Both are optimistic on US and China phasing out tariffs. However, there is risk of the agreement being pushed into 2020 or possibly of a reversal in their stance – this happened in April this year.
• Both see higher rates in one to two years, which the markets have not currently priced in. Neither see a fiscal policy response from the US, but both expect it in the Euro-area.
• Finally, both are bullish equities though cautious in the short-run.
Why does this matter? Two major asset managers sound remarkably sanguine in their global outlook. They expect a continuation of the past few months into 2020. Their take on Euro-area fiscal stimulus appears optimistic given German rhetoric on the topic. They also seem surprisingly sanguine when it comes to valuations.
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