Prediction 7
Equities beat bonds for the seventh consecutive year for the first time in nearly a century.
As of the end of last week, the S&P 500 Index was up 4.0 percent, while the Bloomberg Barclays U.S. Aggregate Bond Index was down 2.0 percent.3 We expect both markets to remain volatile over the next six months, but given the economic growth, earnings and inflation backdrop, we think this prediction is likely to remain correct.
Prediction 8
Corporate capital expenditures increase at the expense of share buybacks.
Capital expenditure levels are picking up, which is boosting productivity and should help the economic expansion to continue. As of May, the Instituite for Supply Management is forecasting capex spending will be up an increadible 10.1 percent in 2018.5 Share buybacks have also increased, however, which makes this prediction a bit muddled. Should capex levels continue to pick up, we may be able to mark this one correct by the end of the year.
Prediction 9
Telecommunication services, information technology and health care outperform utilities, energy and materials.