The outlook – ‘Late Cycle Doesn’t Mean End of Cycle’ – notes
that global economic growth is expected to continue into 2019
Wells Fargo Investment Institute today released its 2018 midyear
outlook report, “Late Cycle Doesn’t Mean End of Cycle.” The report
makes the case that the economic recovery, which coincides with the
equity bull market, has more room to run.
View the digital presentation of the Wells Fargo Investment
Institute 2018 Midyear Outlook, “Late Cycle Doesn’t Mean End of
Cycle.”
The report details where the institute says bond investors
should be positioned on the yield curve as the Federal Reserve
hikes rates. It also describes near-term opportunities in U.S.
equities and suggests that the environment is becoming more
favorable for select alternative investment strategies.
“The first half of the year certainly delivered on our outlook’s
anticipated market volatility, but there are a variety of
indicators that convince us the bull market could run for another
year or longer. Investors need to remain diligent to higher
interest rates and growing trade tensions,” said Darrell Cronk,
president of Wells Fargo Investment Institute and chief investment
officer of Wealth and Investment Management at Wells Fargo.
The report also outlines three strategies for investors to
consider. They include:
- Stay invested in the U.S. late-cycle
expansion. A preference for stocks over bonds, and U.S.
equities over international.
- Weigh risk and reward even more
carefully than usual. Opportunities in high-quality short-term
debt, while being mindful of risk in U.S. high-yield and
international developed-market bonds.
- Take advantage of volatility.
Diversification strategies to prepare for geopolitical uncertainty
and late-cycle market volatility.
“We expect strong economic growth to support earnings and to
guide the equity market higher through at least the first quarter
of 2019, and possibly longer,” said Paul Christopher, head
of global market strategy for the Wells Fargo Investment Institute.
“Yet we expect volatility to continue through the end of 2018 and
continue to closely watch for geopolitical events, Fed policy and
global economic surprises.”
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investments, mortgage, and consumer and commercial finance through
8,200 locations, 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 42 countries and territories to
support customers who conduct business in the global economy. With
approximately 265,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was
ranked No. 25 on Fortune’s 2017 rankings of America’s largest
corporations. News, insights and perspectives from Wells Fargo are
also available at Wells Fargo Stories.
About Wells Fargo Investment Institute
Wells Fargo Investment Institute (WFII) is a registered
investment adviser and wholly owned subsidiary of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company, providing
investment research, strategy, manager research and thought
leadership within the Wealth and Investment Management division
(WIM), with the goal of supplying world class advice to the
company’s financial and wealth advisers.
Risk Factors
Forecasts are not guaranteed and are subject to change.
Diversification does not guarantee profit or protect against
loss in declining markets.
All investing involves risks including the possible loss of
principal. Equity securities are subject to market risk which means
their value may fluctuate in response to general economic and
market conditions and the perception of individual issuers.
Investments in equity securities are generally more volatile than
other types of securities.
Investments in fixed-income securities are subject to market,
interest rate, credit/default, liquidity, inflation and other
risks. Bond prices fluctuate inversely to changes in interest
rates. Therefore, a general rise in interest rates can result in
the decline in the bond’s price. Credit risk is the risk that an
issuer will default on payments of interest and principal. This
risk is higher when investing in high yield bonds, also known as
junk bonds, which have lower ratings and are subject to greater
volatility. If sold prior to maturity, fixed income securities are
subject to market risk. All fixed income investments may be worth
less than their original cost upon redemption or maturity.
Investing in foreign securities presents certain risks not
associated with domestic investments, such as currency fluctuation,
political and economic instability, and different accounting
standards. This may result in greater share price volatility. These
risks are heightened in emerging markets.
Alternative investments carry specific investor qualifications,
which can include high income and net-worth requirements as well as
relatively high investment minimums. They are complex investment
vehicles that generally have high costs and substantial risks. The
high expenses often associated with these investments must be
offset by trading profits and other income. They tend to be more
volatile than other types of investments and present an increased
risk of investment loss. There may also be a lack of transparency
as to the underlying assets. Other risks may apply, as well,
depending on the specific investment product.
Wells Fargo Investment Institute, Inc. (“WFII”), is a registered
investment adviser and wholly-owned subsidiary of Wells Fargo &
Company and provides investment advice to Wells Fargo Bank, N.A.,
Wells Fargo Advisors, and other Wells Fargo affiliates. Wells Fargo
Bank, N.A., is a bank affiliate of Wells Fargo & Company.
The information in this report was prepared by WFII. Opinions
represent WFII’s opinion as of the date of this report and are for
general information purposes only and are not intended to predict
or guarantee the future performance of any individual security,
market sector, or the markets generally. WFII does not undertake to
advise you of any change in its opinions or the information
contained in this report. Wells Fargo & Company affiliates may
issue reports or have opinions that are inconsistent with, and
reach different conclusions from, this report.
The information contained herein constitutes general information
and is not directed to, designed for, or individually tailored to,
any particular investor or potential investor. This report is not
intended to be a client-specific suitability analysis or
recommendation, an offer to participate in any investment, or a
recommendation to buy, hold or sell securities. Do not use this
report as the sole basis for investment decisions. Do not select an
asset class or investment product based on performance alone.
Consider all relevant information, including your existing
portfolio, investment objectives, risk tolerance, liquidity needs
and investment time horizon.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180618005213/en/
Allison Chin-Leong,
212-214-6674allison.chin-leong@wellsfargo.comorKelly Reilly,
314-797-9701kelly.reilly@wellsfargo.com
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