Friday, December 11, 2020
US GDP Forecast
Continued progress in the response to COVID-19, including further stimulus, will be the key to sustaining the recovery. We forecast 4–4.5% US gross domestic product (GDP) growth in 2021. For all our 2021 market insights and economic forecasts, read the new LPL Research Outlook 2021: Powering Forward.
Stocks open firmly lower. US equities are on track for weekly losses after rallying in four of the last five weeks.
- Stalemate on fiscal stimulus negotiations continues to be the primary overhang, while concerns over a government shutdown are creeping higher.
- European markets are under pressure in midday trading.
- Asian stocks were mixed, with China the underperformer.
Is inflation looming? Both headline and “core” inflation readings (excluding food and energy) for November came in slightly higher than the Bloomberg-surveyed economists’ consensus. Inflation is likely to pick up as the economy improves and may run a little hotter in 2021 than we’ve seen in recent years. We discuss the risk of a substantial inflation surprise in the LPL Research blog.
GPS covers global market trends. December Global Portfolio Strategy (GPS) offers LPL Research’s insights on equity asset classes and sectors, fixed income, commodities, and what’s trending around the world. It includes a review of November and updated views:
- Upgraded industrial metals view to positive
- Downgraded precious metals view to neutral
Technical update. A pullback in the S&P 500 Index is continuing for a third day this morning, but the index continues to have substantial support in the range from 3550–3600. The British pound/US dollar cross is reacting negatively to a seemingly increased likelihood of a “no-deal Brexit,” moving off multiyear highs from just last week. This morning the pair is still in an uptrend and above support at 1.30. We maintain an upward bias consistent with our broadly negative view of the US dollar, but would note the dollar is oversold and could rally in the very short term.
COVID-19 news. The United States reported 215,000 new cases on Thursday, the second highest daily increase during the pandemic, though up only 2.6% week over week (source: COVID Tracking Project).
- While daily cases are setting a new record, the week-over-week increase in cases may be showing early signs of slowing as new restrictions take effect.
- Cases in Western Europe as a whole are still falling, but cases in Germany have hit a new high.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data are from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking 1-05088609