Scott Minerd discusses the importance of transitioning sustainable development into an institutional asset class.
This is likely to be another good year for risk-on investing, as an improving economic outlook supports stocks and bonds in an environment marked by less volatility than 2013.
Last January, the global economy faced myriad headwinds, choppiness lay ahead, and we expected plenty of volatility. Nevertheless, I said then that risk assets were the best choice for investors. Now, the headwinds of 2013 have largely dissipated, and the outlook is benign for risk assets for the first three to six months of 2014, if not longer.
What will Santa bring for Christmas … does he exist at all? Yes he does, his name is Bernanke and he has a stock market rally to share and good holiday cheer for all!
The Fed surprised many investors by announcing it will taper in January, but made clear that interest rates will remain near the zero-bound as forward guidance becomes its primary policy tool.
Financial markets have been discounting the end of tapering for months, and whether it happens in December or March is less important than the reality that the U.S. economy is recovering amid a global synchronous expansion.
Major developed economies are all contributing to global economic growth, and this improving fundamental picture, coupled with ongoing monetary accommodation, bode well for risk assets.
As this bull market climbs its “wall of worry,” we can see its underlying strength. Valuation concerns and the risk of a major correction appear overblown, as we should see a continued rebound in economic fundamentals over the coming months.
The Federal Reserve has started to highlight “forward guidance” as a way to keep interest rates lower for longer – and get the exhausted hamster off the treadmill of quantitative easing. We still think tapering remains farther off than most investors expect.
Both bond and equity markets are well-positioned, regardless of whether the U.S. Federal Reserve tapers its asset purchase program.
There remains significant upside for risk assets, but in this liquidity-driven market there is also an increasing risk of a “melt-up” such as the one that preceded the bursting of the tech bubble in early 2000.
In addition to serving as Global Chief Investment Officer of Guggenheim Partners and Chairman of Guggenheim Investments, Scott Minerd is also a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets, an advisor to the Organization for Economic Cooperation and Development, and a contributing member to the World Economic Forum. Minerd is regularly featured in leading financial media outlets, including Financial Times, Barron’s, Bloomberg, CNBC, Fox Business News, Forbes, and Reuters.
Follow Scott on Twitter
Global CIO Scott Minerd explains on Fox Business News at the Milken Global Conference that 2018 should enjoy robust economic growth and stock performance but Fed policy should bring recession by early 2020.
View All Media
You are now leaving this website.Guggenheim assumes no responsibility of the content or its accuracy.
© 2018 Guggenheim Partners, LLC. All rights reserved. Guggenheim, Guggenheim Partners and Innovative Solutions. Enduring Values. are registered trademarks of Guggenheim Capital, LLC.