Three Key Market Questions for 2020
US equity market challenges for 2020 are likely to revolve around some critical questions involving how certain global risks are priced in oil and gold. That leads to questions about what will drive equity prices over the course of the year after the 2019 rally. By contrast from previous years, equity market challenges are not likely to revolve around some of the usual suspects, such as the real GDP outlook or what the Federal Reserve (Fed) might do with rates.
The US economy is in a relatively comfortable pattern of modest growth – 2%, give or take a few tenths of one percentage point – and the Fed has put short-term rates on hold, at least while the economic data remains supportive of the economy. Thus, we have chosen to focus our 2020 outlook on three key questions:
- Oil: Is the Mideast risk premium enough?
- Gold: Can gold rally on the back of geopolitical risks, including the Coronavirus, with US rates on hold?
- Equities: What could drive the indices higher in 2020?
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