Here’s a brief excerpt from the full research report from LPL Research:
Since the wind-down of the Great Recession in early 2009, the latest economic expansion has certainly delivered the goods and rewarded investors’ mailboxes with six consecutive calendar years of positive gains for stocks. “Neither snow nor rain nor heat nor gloom of night” has kept a lid on the continuation of one of history’s greatest bull market advances for stocks, and LPL Financial Research believes this trend of rising equity prices may continue in 2015.
But unlike the last two years, when the global economy produced improved growth on the back of a stabilizing economic backdrop, 2015 will be a year marked by transitions. Likely changes in monetary policy around the world, the return of volatility, and the recent shift in the political balance of Congress could mean 2015 is a year that will have the global economy, markets, and central banks all on the move. To help prepare for rerouting to this more volatile road ahead, our Outlook 2015: In Transit expedites the delivery of the investment insights needed to navigate an economic backdrop shifting to the latter stages of the business cycle.
Significant elements that are in transit in 2015 include:
- The U.S. economy continues its transition from the slow gross domestic product
(GDP) growth of 2011 – 2013 to more sustained, broad-based growth. Ongoing
progress in the labor market, an uptick in wage growth, and continued improvement
in both consumer and business spending have propelled an uptrend in U.S. economic
output. We believe inflation — which has historically accelerated as the economy moves
into the second half of the business cycle — is poised to continue proceeding higher, but
only modestly so. - Central banks around the world will also be on the move in 2015. In the United
States, the economy is likely to continue to travel toward a point where the Federal
Reserve (Fed) will begin raising interest rates, albeit gradually, for the first time
in nine years. The Eurozone and Japan — the world’s second and fourth largest
economies, respectively — could benefit, as central banks in those regions embark
on more aggressive policy actions aimed at restarting and reaccelerating their longdormant
economies. - Washington shifts from a relatively quiet 2014 to take a bigger role in 2015. The
Republican takeover in the Senate and approaching debt ceiling limit might provide the
opportunity for some movement out of the gridlock that has plagued Washington in
recent years.
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