Huitong Network News--December 2018 was an extremely bad time for financial markets, when almost all assets failed to outperform inflation. But in 2019, the market has completely reversed.Morgan StanleyIt said 2019 would be the most "bizarre" year for global stock markets in the past 30 years. Us stocks have hit record highs this year, but at the same time, safe haven assets have also performed well, while many hedge funds have underperformed the stock index.
December 2018 was an extremely bad time for financial markets, when almost all assets failed to outperform inflation. But in 2019, there has been a complete reversal in the market, which Morgan Stanley says will be the most "bizarre" year for global stock markets in the past 30 years. Us stocks have hit record highs this year, but at the same time, safe haven assets have also performed well, while many hedge funds have underperformed the stock index.
With regard to the future trend of US stocks, Morgan Stanley believes that the Federal Reserve will expand its balance sheet in April or May next year, when investors may usher in the top of the current cycle; after that, the market may have to face a world where trade progress is limited and the Fed cannot provide more support. Given the market's emphasis on trade and Fed policy this year, it is fair to sell shares in May (sell in May and go away) or next year.
According to Deutsche Bank's calculations, global stock markets have been in a frenzy in 2019, with a total market capitalization of more than $17 trillion. Global stock markets were worth less than $70 trillion at the beginning of the year, but are now worth more than $85 trillion.
Loose monetary policy around the world has provided the impetus for the stock market rally. Central banks around the world have taken a more dovish approach, boosting markets. The Federal Reserve has cut interest rates three times this year, while the European Central Bank has further cut interest rates, which are already negative.
In addition, the easing of the global trade situation has also helped push up the stock market. Recently, the US House of Representatives approved the Trump administration's new North American trade agreement; in Europe, Johnson's Conservative Party won a huge election victory, which made the prospects for Brexit clear.
Us stocks usually perform well in the week after Christmas and the first two trading days of January, and this rally is known as the "Santa Claus rally" CME Group said there were many hypotheses about the reasons for the "Santa Claus rally", including optimism among traders, year-end tax considerations and some large institutional investors taking leave, leaving the market for retail investors-the former may be more sophisticated and pessimistic, while the latter tend to be more optimistic, as well as investors trying to overcome the so-called "January effect" in which stock prices are expected to rise in January and buy.
Us consumers continue to spend, becoming one of the drivers of the US economy in 2019. Super Saturday, the last Saturday before Christmas, set a record for US consumer spending of $34.4 billion a day, according to consultancy Customer Growth Partners.
Holiday retail allows people to know in advance the health of consumption, and it is usually a leading indicator for predicting the future.Goldman Sachs GroupRetail analysts say the holiday season is likely to disappoint retailers because, despite the strength of consumption, there are some signs of weakness. However, the American Retail Federation is expected to achieve good results.
In terms of economic fundamentals, clearer US international trade policies could help boost corporate spending and productivity, which will make earnings growth stronger in 2020, LPL Financial said. The rise in the stock market was driven by the increase in valuation in 2019, but we expect earnings to play an important role in 2020.