Majority of ultra-wealthy expect recession next year

Fifty-five percent of the super-rich around the world are already preparing for a recession. That’s according to a survey by Swiss wealth management company UBS of 360 global family offices with an average family wealth of $1.2 billion. Results showed 55% of family offices see a recession by 2020, and to mitigate risks, 45% are already adjusting their portfolios. An escalated trade war between the U.S. and China has deepened fears of a recession, while the so-called yield curve inversion — a bond market phenomenon that has historically predicted an economic downturn — also intensified those concerns. Many notable investors and economists have recently warned of heightened recession risks. Those families would do well to recognize that stocks actually rose during half of the last 14 recessions, and they were positive in 11 out of the 14 years leading up to a recession. The stock market was down a year later only three times following a recession. In general, stocks tend to perform about average in the year leading up to a recession, below average during a recession, and above average in the one, three, and five year periods following the end of a recession. It’s these types of lessons

October 3, 2019 No Comments

Investing in the age of trade wars

Financial markets showed signs of stabilizing on Tuesday, a day after China’s announcement of retaliatory tariffs on 5,140 imports from the United States touched off Wall Street’s worst day since January 3. Are things back to normal, or is a global economic slowdown just around the corner? Nobody really knows what’s going to happen, but there are some encouraging signs for investors. First, it’s true that a collapse of U.S.-China trade discussions could hurt the earnings outlook for stocks. Investors expect that Chinese tariffs might lift corporate costs and lower profit margins, while continued uncertainty surrounding a trade deal will hinder the ability of companies to plan or make capital expenditures. But investors should also remember that despite the seemingly outsized presence of China in the U.S. economy, sales of American goods there are relatively small, just $130 billion of U.S. exports out of a $19 trillion economy. U.S. economic growth remains strong, and corporate earnings — the main driver of stock performance — are still resilient. Net income for the S&P 500 rose 0.6% in the first quarter, according to Bloomberg Intelligence, despite predictions from many that it would fall from a year ago. What’s more, the S&P 500

May 14, 2019 No Comments