November 14, 2019
The long wait may be over. No, we aren’t talking about a U.S.-China trade agreement, though that may come before the end of this year. The two sides continue working on a few sticking points.
We’re talking about stabilizing global growth, which has been elusive over the past two years.
Global manufacturing surveys for October point to improvement. The JPMorgan Global Manufacturing Purchasing Manager’s Index (PMI) has increased three consecutive months to within an eyelash of the key 50 level, marking the breakpoint between expansion and contraction.
More evidence of stabilizing global economic growth came this week from the Organisation for Economic Co-operation and Development (OECD). The OECD’s Leading Indicators reflected an upgraded and stable growth outlook for Europe, Japan, and Russia, and a continued stable outlook for China. The only country to see its outlook downgraded was the United Kingdom (U.K.), likely because of the uncertainty around the country’s impending exit from the European Union (Brexit).
“Economic momentum has slowed some in the United States due to trade tensions and weak business investment, while Brexit has been a drag on U.K. growth,” noted LPL Senior Market Strategist Ryan Detrick. “Signs of stabilization in Europe and Japan coupled with recent progress on trade point to an improving outlook for global economic growth and suggest that the recent improvement in global equity market performance may not be a fluke.”
After fits and starts over the past several years, we will be watching closely to see if better performance in global markets can continue. We continue to recommend long-term strategic investors consider holding globally diversified equity portfolios.
For more tactical investors heavily concentrated in the United States, as we wrote here last week, it may be a good time to start looking outside our borders. We aren’t ready to recommend equities in developed international markets over their U.S. counterparts, but the balance of power may be shifting. Stay tuned.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (Member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.
If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
|Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank/Credit Union Deposit|
For Public Use | Tracking #1-917025