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The KWR International Advisor Macro-Outlook, Vol. 1, No 19

November 12, 2019

Scott B. MacDonald, Ph.D.

Keith Rabin

Enjoying the Melt-Up

Summary: October came and went without a major market meltdown and November has largely been a market melt-up. This is causing a change in the narrative on markets. While the U.S. was the only place where economic growth was still marching along at a solid clip, other parts of the world were heading in the direction of a potential slowdown or recession. The new narrative is that the U.S. and China will reach some type of trade agreement, which will help improve global growth prospects. As U.S. equities are hitting records, investors should cast their eyes to other regions, namely Europe and Emerging Markets, which have seen valuations for stocks and bonds beaten up over recession fears or geopolitical risk. Europe and Emerging Markets offer greater yield and will benefit from the bottoming out of the recession scare. Looking ahead, we expect that there will be days of risk-off, but a greater willingness on the part of investors to buy riskier assets through year-end. The days ahead will require greater selectiveness in terms of assets. In this we take some advice from one of the U.S. founding fathers, Benjamin Franklin, who stated, “An investment in knowledge pays the best interest.”

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