The stock and bond rally that everyone hates will continue into 2020. This is the conclusion of some of Wall St.’s top strategists and investors.
These market players also forecast modest gains for US corporate-grade investment debt and high-yield junk bonds. In addition to the 2020 presidential election, they are preparing for a slowdown in economic growth, combined with inflationary pressures, which could also mean an increase in financial market volatility.
The opinion of some of the top players on Wall St
Greg Peters, Head of Multi-Sector and Strategy at PGIM Fixed Income in New York
“I see the yields on 10-year government securities (currently 1.9%) at 1.6%. I personally buy triple-C credit in the high-yield junk bond market, triple-A CLOs (secured loans) and triple-B corporate bonds.
“A breakthrough in inflation bothers me. But in fact, any upward movement in real levels of inflation would be negative for risky assets. So that is what I am focusing on. I think the political risk is very exaggerated.
Rebecca Patterson, former New York-based chief investment officer of BEssemer Trust – Currently, Ms. Patterson is moving to Bridgewater Associates as a senior investor
“For the S&P 500, I expect a price of $ 3,300 for 2020. It’s quite achievable. That speaks to a solid foundation and good, though not very inspiring, revenue growth.
“We are entering 2020 with the same portfolio slopes that we had in 2019. With respect to stocks, we are biased to the US and from a stylistic perspective to growth and quality, although we added more cyclical exposure this fall to hedge, if global recovery is to be more meaningful than we expect. With such low volatility, we also see compelling options in equity derivatives instead of holding our entire equity exposure.
“We are well-positioned for ‘delusions in 2020’ or even slower global growth. What bothers me most is the scenario where we have a slowdown that is developing in a modest recession at a time when central banks have very little room for countervailing support and governments do not agree on how much or what fiscal stimulus to deliver. “
Richard Bernstein, chief executive officer and chief investment officer at Richard Bernstein Advisors in New York
Our portfolios are positioned to continually slow down corporate profits in the US, as we are overweight, healthcare, utilities, blue chips and high quality and accelerating in China, mainly consumer cycle companies. We also have significant positions in TIPS (inflation-protected securities).
Our biggest worry is that the US will crush the rest of the world again, or in other words, 2019 will happen again. This will hurt our results.
Scott Minerd, Global Chief Investment Officer of Guggenheim Partners in Santa Monica, California
“I see 3,500 for the S&P 500, minimum. More interesting is the Nasdaq, which I see at least 10,000. The yield on 10-year bonds can reach 2.40 percent. I buy high quality corporations and credit. “
What bothers me most is the leveraged corporate market. There is more corporate debt than ever. A scenario of a fallen angel is taking shape and this is disturbing.
Source: Financial Times
Original Post: How investors see 2020 shaping up in US financial markets
Trader Aleksandar Kumanov