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Global Investment Outlook and Strategy

January 9, 2020

After a turbulent end to 2018, the S&P 500 Index produced its second strongest gain in two decades in 2019, as investors battled their way through an often chaotic, news-driven year. The U.S. economy enters 2020 on solid footing, aided by precautionary monetary easing, still-stimulative fiscal policy, a healthy consumer, muted inflation, reduced trade-related risks, and a prospective uptick in global growth. With the Federal Reserve now signaling an extended period of policy restraint, the lagged effect of the cumulative 75-basis point interest rate cut in 2019 will bolster domestic activity well into 2020. Finalization of both the “phase one” U.S.-China trade deal and the U.S.-Mexico-Canada Agreement should boost business confidence and spur capital spending as well.

From an investment perspective, the same set of conditions that has provided a near-perfect environment for stocks over the decade-long expansion appears sustainable over the intermediate-term, including slow economic growth and low interest rates underpinned by structural disinflationary pressures.  With equity valuations now at “fair” levels, we believe an improvement in corporate earnings will be a key determinant of the direction and magnitude of equity returns going forward.  While the “Goldilocks” environment is supportive of stocks near-term, 2020 is not without risks, including a re-escalation of the trade war, a further step down in economic growth, and unexpected inflation.

For more details, including a longer discussion of the outlook for global equity markets in 2020, please see the complete Sit Investment Associates’ January 2020 Global Investment Outlook and Strategy paper. Click here: Global Outlook and Strategy (Adobe Acrobat).

Martin Luther King Jr. Day

Due to the close of the New York Stock Exchange on January 20th, transactions received after 3:00 p.m. Central Time on January 17th will be processed on January 21st.  Sit investor services representatives will maintain normal business hours on Monday.

Since 2005, we have been proud supporters of the Federated Challenge in their efforts to support youth mentoring through Big Brothers Big Sisters.

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