January 16, 2018
Guggenheim Investments’ Top 10 Macroeconomic Themes for 2018
NEW YORK – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its 10 Macro Themes for 2018.
Among the major themes cited:
- Stocks will rise in 2018, but by the end of the year investors should look for signs of late-cycle imbalances and begin to position more defensively. Historically, the S&P 500 has rallied by 16 percent, on average, in the penultimate year before a recession, before turning lower.
- Tax reform will provide a 0.2 to 0.5 percent boost to real gross domestic product, but it may not save the GOP’s majority in the House of Representatives.
- With job growth likely to continue to run above the sustainable rate of labor force growth, we expect unemployment to fall to 3.5 percent by end-2018, its lowest rate since 1969, meaningfully below the Fed’s forecast of 3.9 percent, and wage growth will accelerate.
- Growth has rebounded in 2017, and we expect that it will accelerate further in 2018. As such, core inflation should return close to the Fed’s 2 percent target by the end of 2018.
- Since the Fed will overshoot its employment mandate, it will deliver four rate hikes in 2018 to cool the overheating economy and labor market.
- While our 2018 economic outlook is positive, we are heading into the late stages of the business cycle. Our analysis suggests the next recession will occur by the end of 2019 or 2020.
- Given current tight credit spreads, investors are not being compensated for the buildup in credit risk that will be exposed in the years ahead.
For more information, please visit https://www.guggenheiminvestments.com.
About Guggenheim Investments
Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with $243 billion1 in assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 275+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification and attractive long-term results.
1Guggenheim Investments total asset figure is as of 9.30.2017. The assets include $11.6bn of leverage for assets under management and $0.4bn for assets for which Guggenheim provides administrative services. Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.
Investing involves risk. In general, the value of fixed-income securities fall when interest rates rise. High-yield securities present more liquidity and credit risk than investment grade bonds and may be subject to greater volatility. Investments in bank loans securities involve special types of risks, including credit risk, interest rate risk, liquidity risk and prepayment risk.
This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.
This material contains opinions of the author but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.