LPL Financial Research Publishes Investment Midyear Outlook 2018
- Fiscal policy remains key to growth. Tax cuts, a more business-friendly regulatory environment and increased government spending could likely support consumer spending, business investment and corporate profits—key drivers of LPL Research’s economic and stock forecasts.
- Looking at market peaks in context.
LPL Researchbelieves we are starting to see peaks in several economic and market indicators, but given our current environment, that doesn’t mean a recession is necessarily around the corner.
- Creating opportunity amid rising volatility.
LPL Researchexpects greater market volatility may be ahead, but reminds investors that experiencing these ups and downs is a normal part of our market environment. Instead of fearing it, there is the potential to create opportunities by embracing it and strategizing accordingly.
The midyear report maintains confidence in the existing forecasts reported in “Outlook 2018,” with some minor adjustments:
- Economy: GDP growth up to 3%. Early this year,
LPL Researchslightly upgraded the gross domestic product (GDP) forecast, as tax cuts could likely improve personal and business spending. LPL Researchexpects the combination of tax cuts, a new government spending package and financial deregulation to support continued growth.
- Stocks: 10%+ total returns. Strong earnings are still expected to remain the key driver of stock market gains, thanks to the benefits of the new tax law. Although volatility is expected to increase, in the context of steady economic growth and strong corporate profits,
LPL Researchsees the potential for further stock gains in the second half of 2018.
- Bonds: Flat to low-single-digits. Accelerating global growth and rising interest rates continue to pressure bonds. The midyear report maintains the forecast of flat to low-single-digit returns for the Bloomberg Barclays U.S. Aggregate Bond Index, but notes that high-quality bonds may provide diversification benefits for investors’ portfolios.
“Given that we are in the later stages of this economic cycle, with factors such as increased trade tensions and geopolitical uncertainty at play, we do expect greater volatility may be ahead. But it’s important to remember that experiencing these ups and downs is a normal aspect of our market environment,” said
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*Based on total revenues, Financial Planning magazine June 1996-2018
Please see the Midyear Outlook 2018: The Plot Thickens for additional description and disclosure.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
Any economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
All performance referenced is historical and is no guarantee of future results.
All investing involves risk including loss of principal.
No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.
Diversification does not protect against market risk.
All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy.
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Source: LPL Financial Holdings, Inc.