Bank of America Merrill Lynch Research its key macro calls across different assets markets for 2019.
1. Global profit growth declines: "Earnings growth is expected to decline sharply next year, from >15 percent to <5 percent on a year-over-year basis."
2. S&P 500 Index peaks: "Earnings growth also is likely to slow in the U.S., though the near-term outlook remains somewhat positive."
3. Cash gets competitive: "For most of this long cycle, cash yields couldn’t hold a candle to more compelling asset class alternatives like stocks and bonds; with cash yields higher than dividend yields for 60 percent of the S&P 500 already, cash becomes even more competitive in 2019."
4. U.S. economy slows as fiscal stimulus fades: "Real U.S. GDP growth of 2.7 percent is forecast for 2019, slowing in the second half of the year as the effects of fiscal stimulus begin to fade."
5. Global economic growth decelerates: "The global economy is forecast to grow 3.6 percent in 2019, down slightly from 3.8 percent in 2018, with inflation hovering around 3 percent."
6. Global monetary policy divergence: "Global monetary policy is expected to become less friendly in 2019."
7. Credit cycle continues despite widening spreads and flattening curves: "Globally, the credit markets face high levels of episodic volatility in 2019 with shrinking supply and quantitative tightening putting 25 to 50 basis points of upward pressure on investment grade and high yield bond spreads."
8. Emerging markets: "After a major sell-off in 2018, emerging market assets are cheap and under-owned and could be a big winner in 2019 as the dollar weakens, yet EM remains highly vulnerable to spillover effects of U.S.-China trade tensions."
9. Foreign exchange volatility on a weaker dollar: "The U.S. dollar was the best performing asset class in 2018, however, most of the dollar gains appear to be in the past. A weaker dollar is expected in 2019, against a stronger euro and Japanese yen."
10. "Commodities modestly positive: The outlook for commodities is modestly positive despite a challenging global macro environment. We forecast Brent and WTI crude oil prices to average $70 and $59 per barrel, respectively in 2019."