Market Outlook 2019

 

Putting 2019 into Perspective

As we head into 2019, it looks set to be another year of new challenges and potential opportunities. Our 2019 Perspective represents Swissquote Bank’s approach to taking a chaotic world and building a semblance of order, to better support our clients’ investment decisions.
 

«Behind the headlines of Brexit, trades tensions and geopolitical risk, the global economy is performing well.»

 

Market Outlook 2019


Michael Ploog - CFO Swissquote

 

What we will watch in 2019

• Diverging Monetary Policy Cycle

• Emerging markets caught in the storm

• Trade is heading in the wrong direction

• European politics overshadow economic gains

• China’s evolution critical to new world order

• Growth discrepancy will complicate forecasts

 

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What will keep us on our toes

Geopolitical risk

Geopolitical risk indicators are all in the red as in this post– Cold War phase, framed by so-called «New World Order» thinking, everything is shifting. Fears directly reduce household and business confidence, which inhibits spending and slows growth. Actions by the US over the last two years, including withdrawing from the Iran nuclear deal, have created a rift between traditional allies.

 

Financial market free-fall

Given the trade risk, equities have held up surprisingly well. This is primarily due to still positive financial conditions and strong earnings. However, a slightly more aggressive weakening in demand could easily lead to stagflation or recession (which has a high probability of occurring in the US in 4Q 2019), damaging high corporate earnings and profitability levels.

 

Market Outlook 2019

 

Fed Misstep

There is plenty in current US data to be worried about if you are a Fed member. The Fed is now confronted with unique challenges to manage the ramifications of Trump’s trade war, the inflationary effects of fiscal stimulus and threats to its independence. The Fed might have a tough choice to make. It may have miscalculated, given rising inflation and the lagging effect of trade on demand.

 

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Figures in perspective​

Clear signs of fading momentum

Surge in yields causing sell-offs of stocks

Trade war distorting commodity prices

 

Economic Calendar

The Fed listed accompanied by press conferences. ECB meeting accompanied by press conference & macroeconomic projections. The BoJ events shown are accompanied by the publication of central bank’s outlook report.

 

To read all the articles of our Market Outlook, download the PDF.

Market Outlook 2019

 
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