Prediction 6
Non-U.S. stocks outperform U.S. stocks as the dollar sags.
Prediction 7
Prediction 8
Prediction 9
U.S. and global politics spark more market volatility as the cold wars within the U.S. and with China persist.
Prediction 10
A double-digit number of Democrats run for president while President Trump is challenged within his own party.
Robert Doll is chief equity strategist and senior portfolio manager at Nuveen.
This looks to be the sole prediction we are getting wrong. Non-U.S. growth has been slower than we expected, and the U.S. dollar has risen. As of the end of last week, the S&P 500 Index (up 31.1%) is well ahead of the MSCI World Index ex-U.S. (up 22.5%).
The information technology, financial and health care sectors outperform utilities, REITs and materials.
We were getting this one wrong for most of the year, but a sharp rotation to cyclical areas of the market in the fourth quarter helped push this one to the correct category. As of now, a basket of our preferred sectors is up an average of 33.9% while a basket of our less-preferred is up 25.6%.
The annual federal budget deficit approaches $1 trillion, a level unprecedented absent a recession.
Lower taxes and increased spending pushed the deficit to levels never seen in non-recessionary years. For the fiscal year ending September 30, the Congressional Budget Office reported a deficit of over $1 trillion. Estimates for the coming years are climbing even higher.
Trade issues, Brexit worries, geopolitical hotspots and growing political and social discord have all been causing market volatility. And sadly we don’t see that backdrop fading any time soon.
Before some marginal candidates started dropping out, well over 20 Democrats announced runs for the presidency. And at this point, Mark Sanford, Joe Walsh and Bill Weld have announced for the GOP. Add in the escalating drama of the impeachment hearings, and politics certainly aren’t boring. And all of that before things really heat up in an election year.