Enjoy it while it lasts.
Russ Koesterich, portfolio manager at ETF giant BlackRock
BLK, +0.64%
, is mostly bullish on 2020 — at least for the next few weeks.
In a blog post titled, “For 2020, buy early,” Koesterich says the buying momentum from December will likely spill over into January, but could sputter quickly. “The best part of the year may be over before Groundhog Day,” he warned.
He explained that valuations around the world are reasonable at the moment and monetary stimulus should continue to deliver a lagged positive impact.
But then it gets tricky.
“A less-than-short, brutish and nasty U.S. election cycle may keep stocks range-bound for much of the spring and summer,” Koesterich wrote. “In other words, January may account for a disproportionate amount of [the] next year’s gains.”
He also said that recession fears have been overblown and that the economy, benefiting from a friendly Federal Reserve and a supposed “trade truce,” is poised to keep growing. That doesn’t mean a boom is on the way, though.
“We’re not on the cusp of a 1990s-style economic nirvana,” he said. “The same secular headwinds that have inhibited growth, particularly an aging society, do not go away simply because the calendar turns. Demographic changes will still constrain the rate of growth in the labor force, keeping U.S. GDP at around 2%.”
Lastly, Koesterich is looking for interest rates to remain range-bound this year.
“Recent comments from the Fed confirm that 2020 might be a year when the Fed sits on its hands,” he said. “The 10-year Treasury rate
TMUBMUSD10Y, +0.92%
is likely to remain within its recent range, between 1.50% to 2.25%.”
His prediction for early January gains was taking a hit in Tuesday’s session, with the Dow
DJIA, -0.42%
and S&P 500
SPX, -0.28%
trading lower. The Nasdaq
COMP, -0.03%
, however, managed to break into positive territory.
Source : MTV
