Outlook highlights five secular changes from the pandemic
Wells Fargo Investment Institute (WFII) today released its “2020
Midyear Outlook: Recession, Recovery and Resilience,” calling for a
deep but short recession and a gradual U.S. economic recovery
beginning in the second half of 2020. The report provides insights
about the global economy, equities, fixed income, real assets, and
alternative investments. In addition, WFII extends its economic and
market forecasts and risks for the rest of the year and through
2021.
“The current economic recession is historic for its depth, but
governments are responding proportionately and with speed and
growing global coordination. Nonetheless, these jarring events will
impact portfolios far into the future,” said Darrell Cronk,
president of WFII and chief investment officer of Wells Fargo
Wealth & Investment Management. “The task of our Midyear
Outlook report is to examine the contours of change and how we
believe investors should adapt.”
WFII expects low interest rates, low inflation, and U.S. equity
outperformance among global equity markets, especially in large-
and mid-cap equities. The S&P 500 Index target range is 3,150 –
3,350 for year-end 2020 and 3,400 – 3,600 for year-end 2021. The
report also points out risks to the forecasts, such as a new surge
in COVID-19 infections, and the weight of the accumulated
bankruptcies and unemployment.
“Many risks and opportunities will arise. Therefore, it is
important to maintain a temperament of resilience and flexibility,”
Cronk said.
The report outlines five main themes that are already changing
how investable markets interact with the economy. Investors should
consider the following in the next three to five years:
- Consumption patterns are likely to change.
- Businesses will reassess how to add flexibility while
maintaining efficiency.
- The pandemic is likely to intensify existing stresses
globally.
- Government influence in the economy will increase — for better
or worse.
- Health care will play an increasingly prominent role in the
future.
“We believe the pandemic will likely affect the path and speed
of the recovery in the coming 12 to 18 months,” said Tracie
McMillion, head of global asset allocation strategy for WFII.
“Investors should consider adapting their portfolios to those five
secular changes from the pandemic.”
Download “2020 Midyear Outlook: Recession, Recovery and
Resilience” and watch a Wells Fargo Stories video about what’s
ahead for the markets through 2021.
Register for the WFII 2020 Midyear Outlook investor webcast and
conference call on Thursday, June 18, at 4:15 p.m. Eastern
time.
About the Wells Fargo Investment Institute
Wells Fargo Investment Institute 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 & Investment Management division, with the goal of
supplying world-class advice to the company’s financial and wealth
advisers.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.98 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,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,400 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 31 countries and territories to support customers who
conduct business in the global economy. With approximately 263,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 30 on
Fortune’s 2020 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at
Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
Risks
All investing involves risks including the possible loss of
principal.
Forecasts are not guaranteed and based on certain assumptions
and on views of market and economic conditions which are subject to
change.
Stocks may fluctuate in response to general economic and
market conditions, the prospects of individual companies, and
industry sectors. Mid-cap stocks are generally more
volatile, subject to greater risks and are less liquid than large
company stocks. Bonds are subject to interest rate,
credit/default, liquidity, inflation and other risks. Prices tend
to be inversely affected by changes in interest rates. Real
assets are subject to the risks associated with real estate,
commodities and other investments and may not be suitable for all
investors.
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 which 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.
Definitions
S&P 500 Index is a market capitalization-weighted index
composed of 500 widely held common stocks that is generally
considered representative of the US stock market.
General Disclosures
Wells Fargo Investment Institute, Inc. (WFII) is a registered
investment adviser and wholly owned subsidiary of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company.
Opinions represent WFII’s opinion as of the date of this release
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 release. 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.
Wells Fargo Wealth and Investment Management, a division within
the Wells Fargo & Company enterprise, provides financial
products and services through bank and brokerage affiliates of
Wells Fargo & Company. Brokerage products and services offered
through Wells Fargo Clearing Services, LLC, a registered
broker-dealer and non-bank affiliate of Wells Fargo & Company.
Bank products are offered through Wells Fargo Bank, N.A.
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version on businesswire.com: https://www.businesswire.com/news/home/20200616005244/en/
Media Allison Chin-Leong, 212-214-6674
allison.chin-leong@wellsfargo.com
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