Outlook 2019: Fundamental – How to Focus on What Really Matters in the Markets

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AFTER NEARLY 10 YEARS of witnessing the U.S economy and stock market recover—and thrive—investors are starting to wonder if we’ve seen all this expansion and bull market have to offer. At LPL Research, we believe there’s more room to run, and don’t expect an impending recession or bear market in 2019.
Given we are a decade in and likely nearing the end of the cycle, however, it is a good time to start thinking about what the next phase for the economy and markets may look like. The intention here is not to start worrying or assuming the worst, but to remind ourselves that slowdowns and declines—even recessions and bear markets—are a normal part of our market cycle. And even more importantly, if we’re prepared for any downturns, we can be better positioned to weather any challenges that may be ahead.
That’s where Outlook 2019: FUNDAMENTAL comes in—because we could all a handy guide whaen it comes to this market environment. We’re here to make sure you’re prepared for what may be around the corner, or further down the line, and help you through it all.

Click here to download a PDF of this report.]]>

Outlook 2019: Fundamental – How to Focus on What Really Matters in the Markets

<![CDATA[AFTER NEARLY 10 YEARS of witnessing the U.S economy and stock market recover—and thrive—investors are starting to wonder if we’ve seen all this expansion and bull market have to offer. At LPL Research, we believe there’s more room to run, and don’t expect an impending recession or bear market in 2019.
Given we are a decade in and likely nearing the end of the cycle, however, it is a good time to start thinking about what the next phase for the economy and markets may look like. The intention here is not to start worrying or assuming the worst, but to remind ourselves that slowdowns and declines—even recessions and bear markets—are a normal part of our market cycle. And even more importantly, if we’re prepared for any downturns, we can be better positioned to weather any challenges that may be ahead.
That’s where Outlook 2019: FUNDAMENTAL comes in—because we could all a handy guide whaen it comes to this market environment. We’re here to make sure you’re prepared for what may be around the corner, or further down the line, and help you through it all.

Click here to download a PDF of this report.]]>

Midyear Outlook 2018: The Plot Thickens

<![CDATA[The LPL Research Midyear Outlook 2018: The Plot Thickens presents guidance on how the return of the business cycle may unfold during the remainder of 2018 and beyond, along with the investment insights to help investors navigate the twists and turns.
When we as investors began 2018, we were tuned into the recent fiscal policy changes that were expected to propel economic activity and the financial markets higher in the coming year. The handoff in leadership from monetary policy to fiscal policy was well underway as a driver of consumer spending, business investment, and corporate profits. Instead of depending on the Federal Reserve (Fed) to move this expansion forward, fiscal incentives are now critical for continued growth, with the new tax law taking the lead.
Although we expect continued growth, there is also the potential for greater market sensitivity due to the late cycle concerns that can emerge when the economy is doing well. So indeed, the plot has thickened. But that doesn’t mean we’ve taken a turn for the worse. The underlying forces are still forging ahead and this expansion and bull market have not been defeated. Right now, there are many positive fundamentals, like business investment and corporate profits, supporting economic growth and potential market gains.
Armed with the investment insights of LPL Research’s Midyear Outlook 2018, and supported by the guidance of a trusted financial advisor, we expect investors can remain optimistic about what’s ahead for their investment portfolios.

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Outlook 2018 | Return of the Business Cycle

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Over the past eight years, extraordinarily accommodative monetary policy has served as the primary catalyst for spurring continued economic growth in the U.S. and around the globe. Although the economic expansion has delivered steady gross domestic product (GDP) growth, consistent returns for the broad stock market, and an improving job market, the expansion itself has been lackluster. While we’re still set in a familiar scene, solidly in this economic expansion, we need some new characters to take charge—to bring the market back to its traditional roots and raise the bar on what we expect from global growth, a continued expansion, and one of the longest and largest bull markets in history.1
At LPL Research, we’re looking ahead to a “return of the business cycle.” Instead of relying on intervention by the Federal Reserve (Fed) to propel employment and personal consumption, we will turn to fiscal policy and improving business fundamentals to spur further growth in the economy and stock market. Regarding fiscal policy, we’ll look for increased government spending and tax cuts, which could provide added support for businesses in terms of revenue, earnings, and future growth prospects.
We often talk about cycles in terms of the economic periods of recession and expansion. And while we’re not returning to the beginning of that economic cycle, what we’re referring to here is a return to the traditional drivers that propel the cycle. We are looking to the forces that have historically supported economic and market growth, before we entered this recent period of accomodative monetary policy. The economic cycle still matters and we put ourselves solidly in the second half, although with a potentially low likelihood of a recession starting in 2018. But what may be more important in the next year is the fundamental shift we’ve experienced in what’s driving the cycle and what it means for businesses and investment returns.
In short, we expect to return to an environment in which investors may be rewarded for their ability to focus on business fundamentals, as markets respond to the shift from monetary to fiscal support and greater incentives for entrepreneurial risk-taking. The LPL Research Outlook 2018: Return of the Business Cycle reminds investors of where we have been, what we have accomplished, and why the return of these market forces may bring new opportunities for market participants. With this guidance and investment insight, investors will be ready to embrace this market environment in their search for long-term success.

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Midyear Outlook 2017: A Shift In Market Control

<![CDATA[An important shift has taken place in this economic cycle. The Federal Reserve (Fed) was finally able to start following through on its projected rate hike path, raising rates twice in just over a three-month period. By doing so, the Fed showed increasing trust that the economy has largely met its dual mandate of 2% inflation and full employment, that the economy is progressively able to stand on its own two feet, and that fiscal policy may now provide the backstop to the economy that monetary policy has provided throughout the expansion. The gauges say growth engines and market drivers may have changed: power down monetary policy, power up business fundamentals, and potentially take fiscal policy and economic growth off standby.
Thus far in 2017, the consistency of this new fiscal-led dynamic has been uneven, leading to shifting market leadership amidst low volatility and a narrow trading range for major market indexes. To be sure, in the post-election rally, the financial markets began to price in many of the pro-growth policies offered by the Trump administration. Yet, despite an initial flurry of activity, political momentum slowed, and investor sentiment dampened even as consumer and business confidence remained high. It is important for investors to appreciate that despite these developments, U.S. equity indexes managed to progress through the first half of 2017 either at, or very near, all-time highs. Moreover, signs of financial stress, based on interest rates, credit spreads, and market volatility, remained largely absent. Most importantly, even with fiscal policy on standby, the return to business fundamentals, such as renewed corporate earnings growth, can now act as a market catalyst. The Fed will still have its role to play, but monetary policy is powering down as the driver of financial market strength.
Despite the significant role of monetary policy as a market driver throughout this expansion, general investing principles have held true. The ability to form a good plan and stick to it, with judicious adaptation to the market environment, is the time-tested foundation of continued progress toward financial goals. If we are shifting to new market dynamics, including a greater role for corporate profits and fiscal policy, understanding the evolving opportunities will be important for diversified investors. Use LPL Research’s Midyear Outlook: A Shift In Market Control as your guide to the shift in growth engines fueling this market.
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Outlook 2017: Gauging Market Milestones

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In 2016, financial markets, the economy, and geopolitics experienced an unusual number of milestones that have come together to influence the investment landscape: a new president and administration, the stabilization of oil prices, and the end of an earnings recession. Being prepared for 2017 is about gauging these and other milestones, understanding their significance, and responding without overreacting. The LPL Research Outlook 2017: Gauging Market Milestones features market guidance, with forecasts for stocks, bonds, and the economy, that can help you to read the gauges and make adjustments in the year ahead, while staying strategic and maintaining a long‐term investment view.
View the complete Outlook 2017: Gauging Market Milestones.
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