Schwab’s Kleintop On What’s Ahead For Markets In 2019

Jeffrey Kleintop, Chief Global Investment Strategist, Charles Schwab met with Julie Cooling, Founder & CEO, RIA Channel to share his thoughts on what’s ahead for markets in 2019.

As the market reaches maturity, Kleintop believes that we may be headed for a recession. Today’s narrowing gap between the U.S. unemployment and inflation rate is one key indicator of an upcoming bear market, explains Kleintop. While many focus on tracking economic signs of weakness, the stock market is typically 6-12 months ahead in the cycle.

In comparison to 2008’s financial crisis, Kleintop predicts this one to be much more of a “garden-variety recession.” Meaning, some advisors may have very little adjustments to make in their portfolios. While others can think about going underweight in riskier asset classes like emerging markets, in favor of something like Treasuries.

“After eight years of being overweight in tech, we’ve reduced it down to market-weight,” says Kleintop on the impending shift from growth to value. He also expects a rotation in large and small caps, noting that late cycle market conditions typically favor large cap companies.

For more key insights from Kleintop and the 2019 Schwab Market Outlook, head here.