Equity Outlook  |  Q3 2018

Buybacks and M&A may fuel equities, but trade conflict is a key risk

Equity Team

In contrast to a year ago, when global markets were enjoying historically low volatility and record highs, investors today are dealing with more challenging conditions. At the midpoint of 2018, markets have advanced only slightly while volatility has increased and investors are less willing to shrug off risks. Following an acceleration in global economic growth last year, we are now seeing slightly less robust growth in Europe, slowing in China, and heightened concern about global trade. In the United States, growth remains strong, due in large part to the Tax Cuts and Jobs Act.

Looking ahead, we believe equities can advance, but they may do so in fits and starts due to inflationary cost pressures and concerns that we are nearing the end of this growth cycle. We believe the likelihood of recession over the next 12 months is fairly low, but we are cautious about emerging markets, particularly those that are vulnerable to central bank tightening due to high levels of debt.

International markets weaken in second quarter

Next: Several trends could boost equity returns

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An active, research-driven approach to investing in equities

Equity investing at Putnam features a tenured and talented team of portfolio managers backed by an integrated group of research analysts with worldwide reach. Our research organization is structured to focus fundamental analysis on the factors that matter most in global equity markets.

Aaron M. Cooper, CFA
Chief Investment Officer, Equities
Investing since 2000
Joined Putnam in 2011
Simon Davis
Co-Head of Equities
Investing since 1988
Joined Putnam in 2000
Shep Perkins, CFA
Co-Head of Equities
Investing since 1993
Joined Putnam in 2011