Stock Market Crash Talking Points:
- After negotiating a series of economic and geopolitical risks in 2019, the S&P 500[1] rounded out the year more than 30% higher
- Although many risks have been resolved or put on pause, key uncertainties remain
- Global trade conflicts, lackluster global growth, political uncertainty and possible inflation will look to erode equity returns in the year ahead, but can they overwhelm various tailwinds including the major global central banks?
When Will the Stock Market Crash?
Equities in the developed world, particularly in the United States, rounded out the decade with a strong showing as key risks subsided and an accommodative monetary policy backdrop allowed stocks to soar. With 2020 in focus, there is evidence for a continuation higher. Still, some investors harbor concerns over the stock market’s health and stability in the year ahead, but can the headwinds work to outweigh the benefit of looser monetary policy and easing risk trends? Here are some of the themes that could spark a stock market crash in 2020.
Global Trade Conflicts & Slowing Global Growth
Much of 2019 was plagued with fears of slowing global growth, a theme exacerbated by trade wars – mainly between the US and China – that worked to drive uncertainty and delay some businesses from making capital outlays. In turn, slipping global trade and prolonged policy uncertainty exerted further pressure on the already slowing economies of the world. As growth forecasts tapered off, the case for higher equity valuations was undermined as future profit outlooks fell beneath previous expectations.
That being said, an initial “Phase One” trade deal between the United States and China reached at the end of 2019 [2]worked to assuage such fears and sparked the year-end rally into the new decade. Similarly,
