11/19/2019 | Press release | Distributed by Public on 11/19/2019 11:27
BALTIMORE, Nov. 19, 2019 /PRNewswire/ --
T. Rowe Price held its annual Global Market Outlook press briefing today in New York City, during which several of the firm's experts reflected on key market drivers in 2019 and shared their expectations for various asset classes in 2020. Speakers included Alan Levenson, chief U.S. economist; John Linehan, portfolio manager and chief investment officer, Equity; Justin Thomson, portfolio manager and chief investment officer, Equity; Mark Vaselkiv, portfolio manager and chief investment officer, Fixed Income; and David Giroux, portfolio manager, chief investment officer, Equity and Multi-Asset, and head of Investment Strategy.
KEY OUTLOOK OBSERVATIONS
Global Fixed Income
Special Topic: Utilities-The Most Underappreciated Sector
Please see link here for more information from the T. Rowe Price 2020 Global Market Outlook press briefing, including speaker biographies and speaker presentations.
Alan Levenson, chief U.S. economist:
'I anticipate the fiscal policy impulse next year broadly to be neutral, though the potential for further interest rate cuts varies across global economies. Inflation is generally and stubbornly low, which sustains a bias toward monetary accommodation. Europe is seeing cyclical headwinds to core demand, while the U.S. economy should slow as 2020 progresses. The slowing economy in China is here to stay, even without a trade war, as urbanization slows. We expect stimulus to China to be restrained to contain the growth of debt in the country.'
John Linehan, portfolio manager and chief investment officer, Equity:
'The current bull market is the longest, but not the strongest, in modern history. Bull markets typically don't die of old age, but rather from a combination of factors including an economic downturn, Federal Reserve policy errors, regulatory and political uncertainty, and valuation excess. Elevated risks are present for 2020, and there is a wide range of potential outcomes. But in aggregate, we expect to see positive returns, with opportunities in nondefensive companies with high dividend yields as well as attractively priced platform companies.'
Justin Thomson, portfolio manager and chief investment officer, Equity:
'I anticipate that the cyclical conditions are right for international equities to outperform. A series of factors have contributed to the lagging of international equity over the last 10 years, but we may be on the verge of a shift. The burden of political headwinds from the U.S., the China trade war, and Brexit have been more heavily felt across international markets. The tide may be turning as these could give way to the tailwinds of rising innovation in developed and emerging markets, better corporate governance models, and better demographics in emerging markets. There is also the potential for valuation to catch up in international equities.'
Mark Vaselkiv, portfolio manager and chief investment officer, Fixed Income:
'While fixed income returns may not be as strong in 2020 as we have seen in 2019, the case remains for core bonds being an important investment within your asset allocation mix. Low defaults and extended maturities bode well for credit, but markets are unforgiving for fragile businesses, including the energy companies that are so much a part of the high yield bond market. Duration is a double-edged sword. Even though we're not expecting to see rates go meaningfully higher, even slightly higher rates would negatively impact bond performance.'
David Giroux, portfolio manager, chief investment officer, Equity and Multi-Asset, and head of Investment Strategy:
'The conventional wisdom about utilities-that companies' fortunes are tied to the direction of interest rates and not earnings growth-is outdated. Industry dynamics are changing rapidly for multiple reasons, and earnings are growing at a faster rate than before. In our view, this is the only defensive sector without the risk of secular disruption. Utilities' strong investment in renewables creates a flywheel that can benefit everyone. Companies get faster growth and improved regulatory relations and the public and politicians get more clean energy without negatively impacting customer bills.'
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