Insights and education for plan consultants and advisors

2019 GLOBAL INVESTMENT COMMITTEE OUTLOOK

Expect a tougher climb with Brian Nick

Where do you see the global economy in 2019?

In 2018 the global economy was supported by fiscal stimulus in the United States.

Most other large economies actually disappointed versus expectations.

Global growth should be lower next year as that U.S. stimulus fades, but we don't foresee a dramatic slowdown or recession.

Headwinds are stiffening, however.

Higher interest rates and tariffs will weigh on corporate profits and potentially consumer sentiment.

As long as the world's largest economies can manage through this deceleration, we're hopeful that the economic environment will be friendly to investors.

What are some of the biggest risks that investors are considering at this stage?

Trade issues representing serious threat to us and global economic growth.

We don't expect a quick or easy resolution of the negotiations between the U.S. and China.

China is already slowing at an uncertain rate as it attempts to control financial risks.

In the United States the cumulative effect of Fed hikes since 2015 are beginning to take their toll with more potentially to come in 2019.

Given where we are in this market cycle, what is your outlook moving forward?

We expect to see positive returns across most asset classes in 2019 amid sporadic volatility.

Higher interest rates and slowing earnings growth mean U.S. stocks and bonds will both be challenged.

With rates likely to move a bit higher the parts of the U.S. fixed income market that are less sensitive to those changes in interest rates are worth including in portfolios.

U.S. dollar strength may persist unless and until the feds ceases its rate hiking cycle.

And the performance of non-U.S. stocks will improve if the dollar seasons its rise and we get hints of stronger growth in Europe and emerging markets.

How are you positioning portfolios in light of your outlook?

We believe investors should now focus on security selection rather than broad market returns.

We don't believe now is the time to move to cash. We believe risk taking will continue to be rewarded as long as it's done selectively.

In stocks we believe in looking for quality companies with strong cash flows, but we also continue to strongly favor including diversified alternatives like real estate and real assets.

We also want to make sure our portfolios are prepared for the possibility that growth next year slows more than we expect.

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A word on risk
All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Past performance does not guarantee future results.

Video was filmed on December 3, 2019

Featured Speaker : Brian Nick, CAIA, Chief Investment Strategist

Nuveen, LLC provides investment advisory services through its affiliates.

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