After the US killing of Qassim Suleimani on Jan. 3 and Iran’s retaliatory, non-lethal missile strike against two US military facilities in Iraq on Jan. 7, the situation appears to have de-escalated. However, investors continue to worry about the potential for this conflict between the US and Iran to worsen. We do not believe that a war is likely at this juncture, but it is important to understand the potential effects that such a worst-case scenario could have on the markets.
Nuveen’s investment theme for the coming year is 20/20 vision: a clearer path for growth. The “clearer path” part is pretty straightforward: Our investment leaders think the macro fears that dominated most of 2019 have receded. Monetary policy is easier than it was a year ago, and global recession risks seem to have faded too. Trade policy remains a source of concern, but hasn’t been causing the sorts of market selloffs it did in late 2018 and earlier in 2019. And while other geopolitical events such as Brexit and the 2020 U.S. elections will likely spark fresh bouts of volatility, we think what has been the longest postwar economic expansion in history still has legs.
As our 2020 theme suggests, we see both positives and negatives for stocks as we head into the coming year. Some key risks look more manageable, while other fundamental factors may be working against the markets. This looks to be a year in which investment selectivity will be critical.