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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HIGHLIGHTS

  • 2019: a year in review
  • 2020 outlook
  • Medium term signals on the probability of a US recession
  • Equity markets could suffer in 2020 for being too complacent in 2019
  • The global economic and financial situation can be summarized in 6 points

Written on January 10th, 2020.

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