The first quarter was solid across all asset classes. The economy continued to grow in the sweet spot between too slow (and needing fiscal stimulus) and too fast (and needing higher interest rates to cool it down).
Stocks bounced back sharply in the first quarter. And, the stability in interest rates helped bonds rise above peaks reached in 2018. However, the standout performers in the first quarter were real estate and oil and gas pipelines. Real estate has been strong for three of the last four quarters and a surge in pipeline companies reversed a decline from the third and fourth quarter of 2018.
The near-term future looks fairly stable with sluggish corporate earnings projected for the next two quarters. After that, earnings growth is projected to pick up. In addition, Brexit has been delayed until October 31 (see Brexit article), which has helped to calm international markets.
Among the biggest factors in growth of the world economy are the trade relations between the US and China. If and when an agreement is reached, the market is likely to respond positively. While it is in everyone’s best interest to reach an agreement, the risk is that both sides could dig in their heels, further pressuring growth in the world economy.