After 2019, the year of Central Banks, comes 2020, the year of … Profits? Investors would certainly dream of it, but nothing is for certain: while fundamentals remain positive for equities and negative for rates in the short term, a major shift could arise. US corporate margins could erode; with that, the possibility of an American recession over the coming 12 to 18 months can’t be excluded; uncertainty should be plenty. In this context, valuations are too expensive and a 10 to 15% stock market correction (on average, depending on the geographic area) sometimes during the year would be welcome to yield-seeking investors.
What does a quantitative rational model tell us about the 2020 macroeconomic outlook?
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Written on January 10th, 2020.
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