Why We Think the US Equity Bull Market Could Keep Running into 2019

Hear more from Bowers in our latest “Talking Markets” podcast.

Here are some highlights of Grant Bowers’ views in the podcast:

  • There’s been a lot of discussion about the duration of the US bull market. We don’t expect markets to keep climbing forever, but bull markets don’t typically die of old age alone.
  • Even with policy changes that may have accelerated growth, when we look deeper at the health of the two key pillars of the US economy—the consumer and corporate earnings—they are both performing well and not showing signs of stress that would indicate to us the economic cycle is nearing an inflection point or a recession is on the horizon.
  • Comparisons to the late 1990s “Tech Bubble” are not rational. Tech companies today have been highly profitable and are much less levered. Revenue is less economically sensitive and more focused on software and services, which have the potential to bring recurring revenue that would likely be more stable in an economic downturn.
  • Despite near-term outperformance of value as an investment style, many traditional value industries are facing significant competitive challenges from faster-moving competitors or new well-funded entrants. When we look across the investment landscape, we see the pace of disruption is accelerating, and many traditional value industries face rapidly changing competitive landscapes.

The full transcript of the podcast follows.

Host/Richard Banks: Hello and welcome to Talking Markets with Franklin Templeton Investments: exclusive and unique insights from Franklin Templeton.

I’m your host, Richard Banks. Ahead on this episode, the US bull market carries on, even hitting a new record high. Grant Bowers, vice president and portfolio manager with Franklin Equity Group, speaks with Franklin Templeton’s Tim Ramsey. Tim, take it away!

Tim: Thanks, Richard. Grant, the US economy continues to perform well, according to a variety of metrics, but we have seen volatility return to the equity markets in 2018. Looking ahead to the rest of the year and beyond, what is your outlook for the US economy and the stock market, generally?