Hasta 2020, amigos! This will be my last newsletter of the year. I'm taking an extra-long weekend in Puerto Rico and then headed to the great state of Colorado for the holidays. Courtenay Brown and Jennifer Kingson will hold down Axios Markets until I'm back.
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“You only go around once. But if you play your cards right, once is enough.” - See who said it and why it matters at the bottom.
Illustration: Eniola Odetunde/Axios
Investors can expect higher stock prices but also a lot of potential potholes in 2020, according to the investment forecasts of major asset managers.
What they're saying:
Threat level: Managers are predicting the U.S. will avoid a recession. But most say the biggest risk to that is the U.S.-China trade war, which could be ratcheted up at any second by a tweet from President Trump.
The U.S. consumer was responsible for the lion's share of growth this year, as CEOs have lost confidence and corporations have pulled back and will need some help in 2020.
The big picture: None of these major asset managers predict a resolution to the trade war next year, but they almost uniformly expect a de-escalation. That will allow the U.S. economy to grow somewhere between 1.5% and 2% next year and continue to add jobs.
Be smart: Few money managers gave an explicit S&P 500 target, but top strategists at John Hancock, Jeffries, Bank of America Securities and others predict the stock market rises only about 5% from its current level.
After years of U.S. outperformance, fund managers say they expect American assets to deliver gains in line with international markets in 2020.
What to watch: They predict strong growth next year for EM countries, even as China's growth is widely expected to slow below 6%.
Threat level: While his base case is that the growth decline has bottomed, a major risk to EM and global economic strength is India, BofA's senior global economist Aditya Bhave tells Axios. The country has seen its GDP fall from 7% in the second quarter of 2018 to 4.5% in Q2 this year.
Christine Lagarde will host her first press conference as ECB president this morning at 8:30 Eastern. (Bloomberg)
A total of 650 MPs will be chosen as Britain has its third election in less than five years today. (BBC)
CEO optimism fell for the seventh straight quarter, according to a survey from the Business Roundtable. (Axios)
Human and animal blood exports for medical purposes made up 2.3% of total U.S. export value in 2017, the most recent year for which data is available, according to a project of the United Nations Statistics Division. (Newsweek)
After seeing losses in just about every major asset category in 2018, 2019 delivered strong returns for most assets.
The historic outflow from equity funds this year likely has a lot to do with the aging demographics of the U.S., analysts at the Investment Company Institute say.
What it means: Shelly Antoniewicz, ICI's senior director of industry and financial analysis, says that the record flows out of U.S. and global equity funds and into bond and money market funds largely reflect older Americans' desire for safety.
Details: As of the week ending Dec. 4, a record $186.5 billion has been pulled out of equity ETFs and mutual funds.
Fed chair Jerome Powell said Wednesday that the new U.S. trade deal with Mexico and Canada should remove some trade policy uncertainty, and that it's a positive factor for the economy.
Why it matters: For most of the year, groups have been universally calling on Congress to pass the agreement. Now that the deal is near the finish line, it's facing mounting opposition.
What they're saying: "We are seriously disappointed by the removal of certain intellectual property provisions," Thomas J. Donohue, the Chamber's CEO, said in a statement. He specifically pointed to reduced protections for prescription drugs.
Screenshot of the Fed's dot plot
Wednesday's FOMC meeting was largely a non-event, with the Fed holding U.S. interest rates steady as expected by nearly 100% of the market.
Between the lines: However, the Fed's statement and predictions for future policy left many confused.
Of note: Powell also expressed the central bank's willingness to expand its Treasury purchase program to include longer-dated bonds if the repo market sees more stress, but held off on announcing a standing facility or guaranteeing any further initiatives to pump more liquidity into the market.
The legendary Francis Albert Sinatra was born on Dec. 12, 1915. They say he did it his way and sold more than 150 million albums worldwide.