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American Preeminence in a Rattled World

American Preeminence in a Rattled World

Investment Strategy Group
Goldman Sachs Private Wealth Management

January 2019


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Not since we launched our investment theme of US preeminence 10 years ago, supplementing it with our recommendation to stay invested in US equities, have investors been rattled on so many fronts. The current level of angst reflects legitimate concerns across the economic, monetary policy, political and geopolitical fronts. This growing list of investor concerns raises two questions for our clients: first, whether US preeminence is still intact, and second, whether our recommendation to stay fully invested is still warranted.

In this year’s Outlook, we review the economic, social and institutional factors that account for US preeminence, and demonstrate that these remain intact. While the US is not immune to developments beyond its borders, the country is better positioned to weather future storms than virtually any other. It is also sufficiently resilient to absorb uncertainty created from within. We show that many of the current administration’s policies, actions and attitudes that have caused investors angst in recent months are not new and are certainly not unprecedented.

We then discuss why we believe that the likelihood of a US recession in 2019, while higher than last year, is still low. We acknowledge that investor sentiment can be a self-fulfilling force, and bouts of volatility are inevitable as markets continue to react to heightened uncertainty. That said, as unsettling as the recent free fall in financial markets has been, we do not believe it is supported by prevailing economic fundamentals. While we remain vigilant about the broad range of risks that could undermine this recovery and bull market, our recommendation to stay invested remains intact.

 


Goldman Sachs Private Wealth Management regularly publishes insight and commentary on investment and wealth management topics for our clients. To pursue a conversation on this topic, please contact a private wealth advisor.

The Investment Strategy Group is a part of the Investment Management Division of Goldman Sachs and is not a part of the Goldman Sachs Global Investment Research (GIR) Department. The views and opinions expressed by the Investment Strategy Group may differ from the views and opinions expressed by GIR or other departments or divisions of Goldman Sachs.