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“Must be positive consumer going into 2020. We are so when you compare the impact impact that we ve seen so the three pieces of uncertainty that we ve seen mostly coming from trade the upcoming election and the direction of monitoring fiscal policy going into next year and we look at those uncertainties where we want a position is away from trade and business spending. And more toward the consumer which we see as supported by the strong labor market and the strong consumer balance sheet. So we are positive on a consumer going it s next year.
But that being said i think they ll be differentiation within the retail space depending on how individual companies are position you re positive us versus rest of world. We re actually neutral. So we re calling for diversifying across regions as we go into next year given those points of uncertainty that i mentioned yeah. But it is one of the preferred markets that you have or know so we do see opportunity in the us market.
But we are what we like about it is that a lot of the us market is driven domestically. So if you look at us companies. They re getting about 69 percent of their revenues. Generated domestically and for us that looks attractive because you re less caught in the crosshairs of trade versus europe for example.
Where they re deriving less than 50 percent of corporate revenues domestically you feel like valuations have gotten a little stretched in the us or no. So i would say they re about fair at this point in time and we expect to see kind of more volatility and kind of fits and starts especially as we get through the trade situation and then going into next year as we see certain sectors come into the crosshairs of the election. So i think going into the year they re they re about fair and we re expecting you know more volatility ahead..
What to tell you though that with all the risks that have been out there and that still remain stocks still feel like they want to go up right so there is some underlying strength in the economy. I think in part driven by the consumer and i think what we believe is that if we actually get some relief on the trade front. There is upside for stocks we ve just had this dark cloud lingering for quite some time that s really prevented stocks from moving forward. I think when we thought the news was skewing.
Positively. We saw you know the market going up again and then now today. The news came a little more negative. We re seeing things fall again so i think we re gonna see a continuation of this narrative in 2020.
Yeah. Who wants in cary yeah. So i think everything that you said makes sense and of course. There is this plot.
But the market has been pushing higher you know we ve had this cloud for the year. And we once got through that whole inverted yield. Curve issue and then it was like off to the races..
So in september. We had the move the laggards and the value stocks and then we ve had a shift again in october. So for the last six weeks. We ve seen something i have a chart that i think maybe you guys can pull up it shows that the momentum stocks the ones that we re leading the market earlier in the year have lagged.
What s been very good are value stocks but legacy technology microsoft apple amd qualcomm broadcom financials all the big banks investment banks industrials but the best performing group in the last six weeks is biotech so biotech if you look at the chart is that s the top the average of that the top contributors and the biotech index are up 24. Now that to me says the markets brought it it s not just value like if i take is big growth. Definitely not value. It s certainly not just value because technology is moving up.
It s also playing a little bit of catch up now right towards a sort of underperformed it finally started going. But that s a broadening of a market when all groups are catching up. And it s not as if you re just defensive or aggressive. And i take this as a positive sign that investors feel pretty good and those who haven t been in the market want to get in before the end of the year.
They don t want to show clients that they re not invested enough. We actually had an investor survey that we just did and we found that about 80 of the investors that we surveyed said that they expect more volatility next year so in our view. We feel that investors are actually quite uncertain going into next year and two thirds of them said that they think markets are more driven by geopolitical events than buy fundamentals..
Which makes it very difficult to kind of predict and price some of these issues because the outcomes can be quite binary depending. Which way we go there s often those surveys right well i mean i think in this case. We kind of see the the survey kind of confirmed. Some things that we we already know and we already see in terms of how clients have been positioning their portfolios.
We ve been seeing clients have a preference for cash. So that does kind of speak to them that uncertainty that that was reflected back to what about the issue of the the fed you know as part of the backdrop to deal with and and how that relates to where the market is now and where it can go from here. Let s listen to what lloyd blankfein. The former ceo of goldman.
Sachs told. Me yesterday about his view on the market. Specifically. As it relates to the fed.
Low interest rates. Relatively high growth. No demand to raise those interest rates..
And so i d say there s a very very good macro backdrop. Where are now the big risk is you talked about disease low interest rates well clearly if you have a commodity and you attach a zero price to it how does that get allocated efficiently and safely and so is capital going into wrong places are there bubbles being formed. I don t see them. But you never do right i mean.
He s overall point rates are low right good macro backdrop with very low interest rates. It s all of these things have helped the market and i think we ve seen that boost to the point that were made earlier. I think now at this stage. The fed seems to have said that it s gonna hold off unless we hit another soft patch.
So i think they re gonna wait and see what happens with trade next year. Primarily and then how that translate through just translates through to the economic data because right now we have seen some of the weakness and manufacturing looks like it s starting to bottom so i think they re kind of a wait and see mode at this point in time you ” ..
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“Laura Kane, UBS Global Wealth Management strategist, joins The Exchange to discuss how investors should position their portfolio heading into 2020, if investors should be focused in value or growth stocks”,
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