2020: Soft landing, earnings returning
Welcome to our team’s views on the outlook for financial markets and investors in 2020. Against an ever-changing macro backdrop, we believe that a synchronised wave of dovish central bank policy and confident consumers should be enough to prevent a global recession - for now. The earnings outlook is also improving, but there is potential for a shift in market leadership and inflation could re-emerge in 2020, as wage pressures build. How should you navigate this environment and how could it impact the opportunity set across asset classes?
In the latest Fidelity CIO discussion, Andrew McCaffery and Romain Boscher consider how despite continuing sensitivity to changes in sentiment, markets are showing signs of optimism. This is due to earnings generally beating estimates and earnings per share bottoming out in the US and Europe. Greater focus on resilience, particularly in China, and on sustainability is benefiting domestic economies and altering supply chains. However, narrow market leadership, inflated valuations and negotiations around fiscal limits remain potential risks.