Investors likely won’t need to lower their expectations for stocks too much this year but should be prepared for an even bumpier ride than QMA expected just a few short months ago. In this Q2 Outlook and Review, QMA's Global Multi-Asset Solutions group revisits their yearly asset class projections for the first time, since President Trump’s protectionist trade policies began rattling markets in early March.
While rising trade tensions are bound to fuel higher volatility, QMA thinks a full-blown trade war remains unlikely. Despite a noticeable move in interest rates, inflation pressures also seem contained. And experts still expect the US economy to grow by 2.5-3% this year. All of this suggests that, while the odds of a second straight year of 20+% gains have dropped, the probability-weighted return for US stocks is still just slightly lower than their early January projection of 10%.
Hold on to your hats.