Over the past week, our research team has focused on the outlook for U.S. and global equities from various perspectives. Critically, given the steep price decline in late-2018, the call comes down to whether a recession and profit contraction occur in the next 6-12 months.
We examined prospective equity total returns under the three most probable scenarios: renewed economic vigor, economic mush and a recession. Since we foresee relatively low odds of a recession, we remain contractive in our investment strategy, and recommend nibbling in favored sectors and regional markets.