5. Corporate management teams appear to be growing more concerned about trade issues. A recent report from Sanford C. Bernstein & Co. shows that companies are now more focused on the negatives from trade than they are on the positives from lower tax rates.4

6. Although investors are focusing on political negatives, we still see positives from the political backdrop. Trade issues rightfully remain in the headlines, but tax reform and an easier regulatory environment have supported consumer spending and helped promote higher capex levels.

7. Early indications suggest that 2019 may present a more challenging economic and market environment.

Liquidity Concerns Appear Overstated

Some investors are growing more concerned about shrinking liquidity as the Federal Reserve raises rates and shrinks its balance sheet, the value of the dollar climbs and select emerging markets such as Turkey and Argentina experience currency crises. Of all of these factors, we are most concerned about the rising dollar. The increase is not overly problematic by itself, but we would be more worried if interest rates were higher and rising more quickly and/or if economic growth were decelerating.

On balance, we recognize that market liquidity is growing more constrained and the current economic cycle and equity bull market are in their later stages. But we believe such concerns are overwrought. The global banking system remains healthy and global monetary policy is still relatively easy, which suggests that a liquidity squeeze isn’t in the cards.

Trade Remains Uncertain, But Equities Should Overcome These Risks

Trade issues remain a wildcard. Every positive signal from the Trump administration seems to be followed by harsher rhetoric, making it very difficult to forecast the direction of trade issues. The U.S./China relationship remains troubled, Canada’s role in NAFTA is unclear and the U.S. is once again taking a harder line toward Europe. We don’t expect this confusion to end any time soon, and certainly not before the midterm elections.

Our base case assumption remains that trade issues will continue to cause trouble but won’t derail the bull market or end the economic expansion. We expect trade pressures to ease somewhat in 2019. And as long as corporate earnings remain positive and the global economy expands, we see more reasons than not for stock prices to move higher over the coming year.

Robert C. Doll is senior portfolio manager and chief equity strategist at Nuveen Asset Management.