Shifting Sands:
2019 Market Outlook

Inflation, trade wars and euro debt are among the potential headwinds for the world’s economy in 2019, but that doesn’t mean the overall global picture is necessarily a negative one.

If 2017 was the year of synchronized global growth, 2018 was the year the global environment diverged as the U.S. powered ahead while the rest of the world stumbled. Ten years into a record-length recovery and attendant bull market in the U.S., the divergence between the strong U.S. economy and the rest of the world, along with a determined Federal Reserve (Fed), ultimately roiled global equity markets from Beijing to London to New York.

Looking ahead, tighter financial conditions, a downtick in European growth, some idiosyncratic emerging market stumbles, the deleterious worldwide effects of a stronger U.S. dollar, and trade tensions all threaten to spill over into 2019.

The question facing investors as they focus on allocations in 2019 is whether fundamentals are strong enough to steady global markets and whether current asset prices sufficiently discount solid, though weaker, fundamentals and risks to the global outlook.

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All investments involve risk including loss of principal.

Governmental policies in China and changes in those policies could adversely affect the value of any investments in China. The Chinese government continues to exercise substantial control over the economy through regulations and state ownership and foreign investment in the securities of issuers in China is restricted or controlled to varying degrees.

Electric Vehicle manufacturing is at a nascent stage, and companies involved with the development of the vehicles and their associated parts/power sources, may be significantly affected by changes in market demand, obsolescence of technology and related legislation.

Bonds are subject to interest rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be suitable for all investors. Currencies are can decline in value relative to a local currency, or, in the case of hedged positions, the local currency will decline relative to the currency being hedged. These risks may increase fund volatility. Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees. There is no guarantee that dividend-paying companies will continue to pay, or increase, their dividend. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing. High yield bonds involve increased credit and liquidity risk than higher rated bonds and are considered speculative in terms of the issuer’s ability to pay interest and repay principal on a timely basis. Socially responsible portfolios may forego opportunities to invest in other securities when advantageous, or may sell securities when disadvantageous for it to do so while pursuing its socially responsible criteria. Past performance is not a guarantee of future results.

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