We may be entering into the last stage of the post-crisis bull market, likely in 2021. Most analysts see very modest appreciation in global stock markets this year; in the markets we favor, mentioned above, we’re looking for more gains than the consensus expects.
We are watching carefully for economic weakness, and for signs of credit stress or other indications of problems in the global financial system. Thus far we have not seen anything significant to derail our belief that markets can continue to rally towards their eventual peak before the bull market is over. Worldwide, economic growth is strengthening; and thorough indices of financial-system health are not flashing warning signals. Our favored aggregation of financial stress data, compiled by the Chicago Fed, remains firmly in friendly territory.
Source: Bloomberg, LLP
It’s within that framework, also, that we believe gold can make steady progress in 2020, helped by modestly rising inflation, ongoing central bank purchases, and a slowly increasing backdrop of concern about potential risks in the minds of many retail and institutional investors.
Of course, like many, we do see long-term risks. Ultimately, problems are likely to emerge in a number of different highly leveraged areas of the global financial system, and lead to a crisis whose epicenter could be Europe, could be China, or could be some other locus that we have not yet identified. However, we do not believe that investors will be well-served to let such as-yet distant eventualities keep them out of a stock market in the last phases of an epic bull run. An attitude of vigilant optimism is, we think, the best stance.
Should our view change, our clients and subscribers will of course be the first to know.
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