The year is young, but the markets are once again on pace to break through all-time highs. And as Punxsutawney Phil not seeing his shadow has us eager for an early spring, we can’t help ourselves from doing some fore”shadowing” of our own as the markets battle strong headwinds in the form of the coronavirus, an impeachment trial, and an election year wrought with rigid partisan politics.
At the onset of a new year, it is fascinating to compare the many stock market forecasts available. We compared the S&P 500 performance predictions of some of the biggest market participants and found a range from as pessimistic as a drop of over 7% to as optimistic as a gain of over 11%. That's quite the range. The average forecast of these market participants is 3.2%.
What does that mean? It just means that nobody knows what will happen in 2020. But it adds support to our expectation that financial and risk assets will end the year in the positive range (but muted compared to 2019). Here is a list of the predictions:
Source: Anfield Capital, citing Analyst Notes, Yahoo Finance, as of 12/23/2019
It is difficult to predict market performance over a 12-month period. It gets a little easier when you increase the time horizon. We share Anfield Capital's beliefs that U.S. Large Cap will outperform other equity markets over the next three to five years.
Source: Anfield Capital, 2020 (and Beyond) Capital Market Expectations, January 22, 2020
One of the reasons why we expect financial and risk assets to be positive this year (despite increased volatility) is that central banks appear to be in easing or “steady-as-she-goes” mode, which should be positive for equity markets. It appears that for the time being, recession fears are fading into the background despite ongoing geopolitical and trade tensions. Corporate earnings are also expected to rebound this year. These conditions should boost financial markets in 2020. In conclusion, here are longer-term market predictions from Anfield Capital:
Source: Anfield Capital, 2020 (and Beyond) Capital Market Expectations, January 22, 2020
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