By Barbara Kollmeyer, MarketWatch
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Is that you, Santa Claus?
Our call of the day , from Deutsche Bank strategists who are sounding an all-clear over one big debate this year, looks timely. “There are signs that the global economy is bottoming out. We now expect an improvement in global growth next year,” write Henry Allen, Quinn Brody and Jim Reid, in a new report.
“Key to our optimism is that the risks of trade wars and Brexit are evolving in positive ways, and the possibility of a radical policy shift to the far left in the U.S. and the U.K. after their respective elections seems remote,” says the Deutsche Bank team.
They expect global growth of 3.1% this year and next; the U.S. expanding 2.3% in 2019, and dipping to 1.7% in 2020; Chinese growth slowing from 6.2% this year to 5.9% the next; and the eurozone ending at 1.1% this year, then falling to 0.8% in 2020. Emerging market economic growth will hit 4.4% next year, from 4% this year.
Confidence on the global front underpins their market views. “We remain bullish on equities, especially the U.S., where we expect the S&P 500 to move higher by the end of Q1 next year,” say the team.
Among the downside risks are escalation of the U.S.-China trade war; an extension of tariffs to Europe, which would hit global growth hard and trigger recessions; rising tensions between Iran and Saudi Arabia; and a U.K. crash out of the E.U.
Here’s Deutsche Bank’s chart of the best-performing assets this year.
Deutsche Bank Research
Alas, the gains from futures market earlier have up and left. The Dow /zigman2/quotes/210598065/realtime DJIA -0.29% , S&P /zigman2/quotes/210599714/realtime SPX -0.20% and Nasdaq /zigman2/quotes/210598365/realtime COMP +0.27% are modestly off. Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.63% are also down, though Asia markets /zigman2/quotes/211618636/realtime XX:ADOW +0.13% managed a positive close after the China data. Oilis climbing on speculation that Saudi Arabia will push for extended oil-production cuts at this week’s OPEC meeting.
Market gains were trimmed after U.S. President Donald Trump threatened steel tariffs on Brazil and Argentina in a tweetstorm.
That’s as some sources say a U.S.-China phase one trade deal won’t come until the end of December at the earliest. Elsewhere, China will sanction several American pro-democracy organizations in retaliation for U.S. legislation supporting Hong Kong protesters.
We’ll see how retailer Walmart /zigman2/quotes/207374728/composite WMT +0.38% , e-commerce company Amazon /zigman2/quotes/210331248/composite AMZN -0.04% and others fare on Cyber Monday, the big post-Thanksgiving online shopping day, after record Black Friday sales.