Wells Fargo Investment Institute Midyear Outlook

The outlook – ‘Late Cycle Doesn’t Mean End of Cycle’ – notes that global economic growth is expected to continue into 2019

NEW YORK--()--Wells Fargo Investment Institute today released its 2018 midyear outlook report, “Late Cycle Doesn’t Mean End of Cycle.” The report makes the case that the economic recovery, which coincides with the equity bull market, has more room to run.

View the digital presentation of the Wells Fargo Investment Institute 2018 Midyear Outlook, “Late Cycle Doesn’t Mean End of Cycle.”

The report details where the institute says bond investors should be positioned on the yield curve as the Federal Reserve hikes rates. It also describes near-term opportunities in U.S. equities and suggests that the environment is becoming more favorable for select alternative investment strategies.

The first half of the year certainly delivered on our outlook’s anticipated market volatility, but there are a variety of indicators that convince us the bull market could run for another year or longer. Investors need to remain diligent to higher interest rates and growing trade tensions,” said Darrell Cronk, president of Wells Fargo Investment Institute and chief investment officer of Wealth and Investment Management at Wells Fargo.

The report also outlines three strategies for investors to consider. They include:

  • Stay invested in the U.S. late-cycle expansion. A preference for stocks over bonds, and U.S. equities over international.
  • Weigh risk and reward even more carefully than usual. Opportunities in high-quality short-term debt, while being mindful of risk in U.S. high-yield and international developed-market bonds.
  • Take advantage of volatility. Diversification strategies to prepare for geopolitical uncertainty and late-cycle market volatility.

We expect strong economic growth to support earnings and to guide the equity market higher through at least the first quarter of 2019, and possibly longer,” said Paul Christopher, head of global market strategy for the Wells Fargo Investment Institute. “Yet we expect volatility to continue through the end of 2018 and continue to closely watch for geopolitical events, Fed policy and global economic surprises.”

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investments, mortgage, and consumer and commercial finance through 8,200 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

About Wells Fargo Investment Institute

Wells Fargo Investment Institute (WFII) is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research and thought leadership within the Wealth and Investment Management division (WIM), with the goal of supplying world class advice to the company’s financial and wealth advisers.

Risk Factors

Forecasts are not guaranteed and are subject to change.

Diversification does not guarantee profit or protect against loss in declining markets.

All investing involves risks including the possible loss of principal. Equity securities are subject to market risk which means their value may fluctuate in response to general economic and market conditions and the perception of individual issuers. Investments in equity securities are generally more volatile than other types of securities.

Investments in fixed-income securities are subject to market, interest rate, credit/default, liquidity, inflation and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond’s price. Credit risk is the risk that an issuer will default on payments of interest and principal. This risk is higher when investing in high yield bonds, also known as junk bonds, which have lower ratings and are subject to greater volatility. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.

Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.

Alternative investments carry specific investor qualifications, which can include high income and net-worth requirements as well as relatively high investment minimums. They are complex investment vehicles that generally have high costs and substantial risks. The high expenses often associated with these investments must be offset by trading profits and other income. They tend to be more volatile than other types of investments and present an increased risk of investment loss. There may also be a lack of transparency as to the underlying assets. Other risks may apply, as well, depending on the specific investment product.

Wells Fargo Investment Institute, Inc. (“WFII”), is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors, and other Wells Fargo affiliates. Wells Fargo Bank, N.A., is a bank affiliate of Wells Fargo & Company.

The information in this report was prepared by WFII. Opinions represent WFII’s opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally. WFII does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.

Contacts

Allison Chin-Leong, 212-214-6674
allison.chin-leong@wellsfargo.com
or
Kelly Reilly, 314-797-9701
kelly.reilly@wellsfargo.com

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