Scott Minerd, Chairman of Investments and Global CIO, and Guggenheim’s Macroeconomic and Investment Research Group analyze the 10 macroeconomic trends likely to shape monetary policy and investment performance before a likely recession in late 2019/2020
NEW YORK – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its 10 Macro Themes for 2018.
Among the major themes cited:
- Stocks will rise in 2018, but by the end of the year investors should look for signs of late-cycle imbalances and begin to position more defensively. Historically, the S&P 500 has rallied by 16 percent, on average, in the penultimate year before a recession, before turning lower.
- Tax reform will provide a 0.2 to 0.5 percent boost to real gross domestic product, but it may not save the GOP’s majority in the House of Representatives.
- With job growth likely to continue to run above the sustainable rate of labor force growth, we expect unemployment to fall to 3.5 percent by end-2018, its lowest rate since 1969, meaningfully below the Fed’s forecast of 3.9 percent, and wage growth will accelerate.
- Growth has rebounded in 2017, and we expect that it will accelerate further in 2018. As such, core inflation should return close to the Fed’s 2 percent target by the end of 2018.
- Since the Fed will overshoot its employment mandate, it will deliver four rate hikes in 2018 to cool the overheating economy and labor market.
- While our 2018 economic outlook is positive, we are heading into the late stages of the business cycle. Our analysis suggests the next recession will occur by the end of 2019 or 2020.
- Given current tight credit spreads, investors are not being compensated for the buildup in credit risk that will be exposed in the years ahead.
For more information, please visit https://www.guggenheiminvestments.com.
About Guggenheim Investments
Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with $243 billion1 in assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 275+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification and attractive long-term results.
1Guggenheim Investments total asset figure is as of 9.30.2017. The assets include $11.6bn of leverage for assets under management and $0.4bn for assets for which Guggenheim provides administrative services. Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.
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