Last month, Azzad Ethical Fund portfolio manager Christian Greiner, CFA®, presented Azzad’s 2020 Investment Outlook webinar. The full recording can be watched here, but here’s a look at three of the most interesting slides in the presentation.
1) Slow and steady economic growth
With this slide, Christian showed that the economy is still positive, despite negative headlines and sluggish growth. In July of last year, we passed the record for the longest uninterrupted recovery in the post-war era. It may not feel that way for a lot of people, because it’s been the slowest recovery, too. There are lots of reasons for this sluggishness–recoveries from financial crisis tend to take longer; tightness of credit may have inhibited growth in the early part of the cycle; and there has also been an uneven distribution of rewards (wealth concentrated among the rich) compared to previous recoveries.
Still, due to the resilience of this economic recovery, not a lot of market observers are saying a recession is imminent in 2020. It’s looking like more slow and steady economic growth.
2) A recession will happen eventually
An inverted yield curve, which is a useful predictor of recessions, happened in 2019. So, when will the next recession start? Christian said that if you look at the historical evidence, the next recession could be as soon as May 2020, but if things are more like recent history, we could be looking at the summer of 2021.
3) Stock prices still look good for 2020
In this slide, Christian showed that the Federal Reserve is helping to support stock prices by expanding its balance sheet, or buying assets. It started doing this again back in the fall of 2019 in response to some issues in keeping interest rates steady in certain corners of the market. Although there are other reasons to be optimistic about stocks, including solid corporate earnings, the injection of liquidity into the system by the Fed makes stocks even more attractive.