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In their latest installment of quarterly outlooks, PGIM experts provide perspective on the markets in 2020 and beyond.
In the first part of PGIM Fixed Income’s first quarter outlook, “2020 Vision Check: All Things Considered, Not Bad,” Robert Tipp, chief investment strategist and head of global bonds, says that while 2020 might not bring a similar degree of performance as 2019, there are indeed reasons to consider why the bond market—as well as the global economy—may remain on a positive, albeit slightly lower trajectory in the year ahead.
In the second part of the outlook, “Extolling the Virtues of Exquisitely Mediocre Global Growth,” Nathan Sheets, chief economist and head of global macroeconomic research, says that with low inflation and generally accommodative central banks, economic developments seem poised to provide a supportive environment for risk taking. Indeed, the limiting factor for markets is likely to be asset valuations, rather than recession risk.
In QMA’s “2020 Outlook & Review,” the quantitative asset manager’s Global Multi-Asset Solutions team acknowledges 2019 will be a tough act to follow, but expects risky assets to grind higher in 2020, as an improvement in global growth drives a recovery in corporate earnings growth.
The growth acceleration would be driven by a bounce-back in growth outside the United States and the continuation of the U.S.’s current growth rate. The past couple of years have been characterized by growth divergence, with the U.S. significantly outpacing the rest of the developed world, which did not benefit from the fiscal stimulus and strong consumer spending that revved up the U.S. economy. In contrast, 2020 should be a year of convergence, as fiscal policy turns more supportive in the Eurozone, Japan and the U.K., and the fiscal support from the 2017 tax cuts fades in the United States.
In PGIM Real Estate’s Trends for 2020, the global real estate asset manager identifies four key global trends that are set to have a significant aggregate impact, and 10 region-specific trends that reflect opportunities to benefit from diversification by strategy and geography. According to the outlook, in absence of a more pronounced economic downturn, real estate markets look set to deliver another year of decent, if not spectacular returns.
According to Jennison Associates’ “Market Review and 1st Quarter Outlook,” the U.S. economy, and the U.S. consumer in particular, remain on firm ground. Unemployment is low, wage gains are driving consumption, housing activity is improving, and corporate profits are forecast to grow in the mid- to high-single digits in 2020. Going into the first quarter, the fundamental equity manager believes that secular growth opportunities and industry-leading companies will continue their long-term outperformance.