Capital Market Outlook
December 2, 2019
IN THIS ISSUE
- Macro Strategy—While some transient increases in initial claims and a modest rise in unemployment are possible in a lagged response to past Federal Reserve (Fed) tightening, unusually high uncertainty during the past four years has restrained investment and consumer spending, keeping real gross domestic product (GDP) below potential. This current lack of overheating still evident in below-target inflation makes a recession unlikely in 2020, as more accommodative policy bolsters demand back in line with potential, keeping unemployment around 50-year lows.
- Global Market View—One key source of support for U.S. equities has been aggressive corporate share buyback programs, with companies repurchasing their own stock at record levels in 2018 and 2019. In this issue, we discuss the latest trends in share buyback activity and the outlook for 2020, which in our view will be a key determinant of market returns.
- Thought of the Week—China’s growth has slowed, triggering fears among investors that global growth could disappoint in 2020. Real annual economic growth is estimated to be sub-6% for the first time in three decades. That said, incremental Chinese output in 2020 still equates to almost $800 billion, a figure larger than most economies. With the Chinese consumer expected to play a larger role in the economy in the coming years, China’s growth story should remain intact.
The opinions are those of the author(s) and subject to change.
This material was prepared by the Chief Investment Office (CIO) and is not a publication of BofA Global Research. The views expressed are those of the CIO only and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer by any Merrill or Bank of America entity to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
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