Reasons For Optimism…And Pessimism

Although we remain mostly constructive, risks remain. We present the following reasons for optimism and pessimism, adapted from a recent JP Morgan Research report.4 First, the positives:

1. The economy may be slowing, but doesn’t appear headed for recession.

2. Likewise, earnings growth is slowing, but should remain positive for 2019.

3. Equity valuations levels are quite a bit more attractive now than they were a year ago.

4. The Fed is backing off its tightening campaign and is more dovish.

5. The equity market decline has not been based on deteriorating fundamentals, but more on limited liquidity.

6. The corporate sector remains healthy, with buybacks and dividend increases looking strong.

These points, however, can be matched with some negatives:

1. Global growth is slowing and unbalanced