- The U.S. continues on a trend of moderate economic growth, even as positive impacts from 2017 tax changes that helped extend the cycle fade.
- Positive employment and wage trends in the U.S. should support continued healthy consumer spending in 2019.
- Strong earnings growth in 2018 and the recent market pullback have combined to make valuations attractive amid moderate economic growth.
- Many current risks are typical of a late-stage expansion, like cost pressures and the flattening yield curve; and markets have already reacted sharply to some risks specific to this cycle, like the U.S. trade dispute with China and general political uncertainty.
- We favor sectors that continue to benefit from a mix of positive secular and cyclical tailwinds, including Health Care, Information Technology, and Communication Services.
- With the consumer acting as a key driver of economic growth, we believe exposure to consumer-focused sectors, such as Consumer Discretionary and Consumer Staples, is warranted.
- We are avoiding the most economically-cyclical sectors, such as Industrials, Materials, and Energy.
• Consumer Discretionary
• Consumer Staples