LPL Financial Research Publishes Its Midyear Outlook 2019

Last Edited by: LPL Financial

Last Updated: June 24, 2019

LPL Research Midyear Outlook 2019 brochure cover

CHARLOTTE, N.C. – June 24, 2019 – Leading retail investment advisory firm and independent broker/dealer LPL Financial LLC today announced that its annual Midyear Outlook 2019 is available for download. The report, “FUNDAMENTAL: How to Focus on What Really Matters in the Markets,” contains investment insights and market guidance through the end of 2019.

The LPL Financial Research report shares that as investors face the prospect of periodic bouts of volatility, emphasizing fundamentals will remain critical to making effective investment decisions. Midyear Outlook 2019 provides updated views of current fundamentals that should persist as shorter-term concerns fade, while discussing four primary pillars for investing – policy, the economy, fixed income and equities.

The LPL Financial Research report emphasizes the following:

Policy: Progress on trade remains central. LPL Financial researchers continue to believe that economic—and political—self-interest will bring the United States and China back to the table, although risks have increased. Clarity on cross-border transactions should lead to increased business confidence, higher capital investment and improved productivity, likely extending economic and profit cycles. Given signals from the yield curve as well as several weaker economic reports, LPL Financial researchers look for the Federal Reserve (Fed) to be more accommodative in coming quarters.

Economy: GDP growth of 2.25 to 2.5 percent. The LPL Financial Research report states that progress on trade remains central to growth projections, and with negotiations stalling in the second quarter, LPL researchers reduced slightly their 2019 gross domestic product (GDP) forecast to the 2.25 to 2.5 percent range, supported by consumer spending, business investment and government spending.

Fixed Income: Higher yields from current levels. Considering the Fed, inflation and expected progress on trade, LPL Financial researchers now look for the 10-year Treasury yield to reach the 2.5 to 2.75 percent range in the next six to 12 months.

Equities: S&P 500 Index appears fairly valued around 3,000. Based on current fundamentals on economic growth, corporate profits, inflation and interest rates, LPL Financial researchers maintain their year-end 2019 fair value estimate for the S&P 500 of 3,000. This estimate is based on a price-to-earnings ratio (P/E) of 17.5, well within historical norms, and index earnings per share of $170, a 5 to 6 percent increase over 2018. Should clarity on trade and monetary policy result in an improved outlook for corporate profits, LPL Financial researchers will revisit this forecast.

“Although the environment has become more challenging, the pillars of fundamental investing remain sound. We will continue to monitor the impact of trade developments, though for now, the odds of a near-term recession appear to remain low,” said LPL Financial Executive Vice President and Chief Investment Strategist John Lynch. “By focusing on the fundamentals, we believe investors can make the most effective decisions for their diversified long-term portfolios.”


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Important Disclosures

Please see the Midyear Outlook 2019, “FUNDAMENTAL: How to Focus on What Really Matters in the Markets” for additional description and disclosure.

The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Any economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

All investing involves risk including loss of principal.