Following a year of double-digit equity returns and strong performance for bonds, a survey of 24 strategists, economists and portfolio managers from Natixis Investment Managers and Natixis Bank suggests that managers are keeping a close eye on the U.S. presidential election cycle and elevated asset prices going forward.
The U.S. presidential election has replaced a disorderly Brexit as a prominent concern, and managers are calling for “a reversal in political fortunes as some modest Brexit clarity pushes European equities closer to the top for best performing assets classes, while a murky view of the presidential election and elevated valuations drop U.S. equities closer to the middle of the pack,” say authors of the report We’re on the Road to Nowhere: Natixis Strategist 2020 Outlook.
“The view on U.S. equities generally held steady but was surpassed by significant upgrades to UK and European equities,” they add. “Sentiment toward UK stocks improved on hopes for a softer Brexit, while prospects for European equities also brightened, based on more attractive valuations and somewhat greater confidence in the economy.”
Esty Swek, head of global market strategy for Natixis Investment Managers Solutions says most remarkable about the survey is the division of managers’ opinions. “It seems as though every optimistic outlook is balanced out by a pessimistic one. While asset class forecasts varied, there was little consensus in terms of bullish versus bearish direction,” he says. “The aggregated view of our strategists shows the challenge many investors will face as the world enters a new decade: economic growth that is positive but hardly above stall speed, valuations that are elevated but not exorbitant and geopolitical events that could either boost or sap market confidence.”
