Happy 2018! Last year was an eventful one for the markets as optimism about growth and pro-business policies pushed markets higher. The new year starts with most of the economic dialogue focused on the momentum of the economy and the ultimate impact of the tax reduction on future growth. The big question is whether or not the performance of the economy will exceed market expectations. This week we get the December employment report on Friday. I expect the reading to exceed the market’s expectation of 190,000 new jobs and an unemployment rate of 4.1%.
Below are a few predictions that are not the market’s consensus but I believe have a better chance of happening than the market is currently pricing in. Penn Mutual Asset Management will post its official 2018 market expectations in a separate post, but I thought these specific predictions would make for interesting dialogue material for the first business day of the year.The S&P 500 Index falls by 20% during the year prior to ending higher. The 2-30 year yield curve inverts as inflation fears impact the bond market. The U.S. dollar weakens by 10% during the year versus the Euro and Yen. The Republicans hold the House and Senate during midterm elections. Bitcoin loses more than 50% at some point during the year and is no longer the most valuable cryptocurrency by year-end.
This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.