What’s the outlook now we have some more clarity:
Trump will be impeached but the Senate will not convict, and Brexit will happen by end of January and there will be no deal extension past end of 2020 – by law.
So, given the market knows all this, where does it leave us?
Let’s start with the UK first, then US. The 350 largest UK stocks first. At the time of writing, over the past 5 trading days, Tullow oil is up 52%, Sports Direct is up 34%, Stagecoach up 22%. Thanks to the election result, others with big relief rallies include Virgin Money and Balfour Beatty, Savills, Barratt, Taylor Wimpey.
But which are attractive on our award-winning algorithms for their 12 month growth and outlook, allowing for their valuation and the safety of the income they generate?
Based on our weighted measurements and, dare I say, outstanding track record, these are (drum roll and trumpets please): Balfour Beatty, Kainos, International Consolidated Airlines, Telecom plus, Royal Bank of Scotland, Taylor Wimpey, Royal Mail, Bellway, Bovis, Persimmon. Let me turn to the US. Again, at the time of writing, the trade deal is not done with the Chinese, but there are certainties at least we know regarding impeachment at least.
Again, the big movers over the past 5 days include Western Digital, up 17% and Micron, up 14% - of course surrounding the China issue. But which on our algorithms are performing especially well? Which are the highest rated for a 12 month outlook?
Here I see Halliburton, PPL, Qorvo, Schlumberger, Adobe. Why? They have sales growth, income and fair valuations.
So what kinds of gains would I be looking for over a 12 month period? 20% unleveraged would not be out of the ordinary, and 100% with modest leverage. The FTSE 100 measuring the value of the 100 largest UK companies has in 2019 kept above 7100 for the most part and now reaching 7600 is likely in 2020 to make gains in my view. The shadow hanging over it will be whether there will be a hard Brexit. But I expect more positive news than negative on this during the year and so an unleashed UK stock market in 2020.
What about the US? 2020 – election year? At an all time high with a million reasons it should not be, from tech over valuations to impeachment threats to trade wars. The index is resilient and the President, unlike any other is focused on keeping it that way.
What will the world feel in 2020 – I don’t think it’s pessimism. And so, I think the US benefits. The Chinese and EU are hell bent on delivering money to the market to try to fuel growth.