Lion Group Holdings – U.S. Markets Moving Forward
Phases & Risk

The United States corporate earnings and economy are experiencing an upbeat cycle during 2018. Markets have seen that confidence and then thrust it forward in time. Lion Group Holdings see solid fundamentals holding for at least another year.  Conversely we also sense that there could be significant risks deep into 2019.

Phases

The U.S. economy works to a beat, a rhythm that encourages the outlook to stay very strong for the next 12 months, this is a very reasonable observation. Unemployment is at a 49 year low, consumer confidence is extremely high and corporate earnings are excellent. The Fed believes the economy is humming and is taking measured steps with interest rates to prevent the economy from overheating.

The Fed and the market's near term outlook is very positive. Currently our position in U.S. Government bonds is neutral, but the bond market may become unstable some time next year as technicals predict a possible inversion. We are looking at this constantly as it is difficult to predict when that inflection could occur. So to summarize the next 12 months is looking pretty safe, but beyond the horizon it could get choppy.

Risk

Lion Group Holdings firmly understand the importance of evaluating risk for our business direction and for our clients. In respect to the current medium term outlook we do see potential issues with international trade disputes. Significant trade tariff issues and forceful rhetoric could possibly snowball into a trade war! The language lately of major trading partners has become concerning.

To date this has had a negligible impact on the economy. The concern is that if protectionism escalates it could affect how U.S. and global corporations move forward with their spending plans. Our view is based on how the president creates scenarios which sometimes appear extreme, he often utilises the effect to give him an advantage in pending negotiations.

We believe a damaging trade war is very unlikely, but we must keep a sharp eye on events as they unfold, and be poised to react accordingly to any threats posed.

Conclusion

The U.S. equity markets maintain our preference in global portfolios. The GDP is strong, we are looking at a steady 3% to 4% growth. The expansion is controlled to reduce risk and create sustainability.

Lion Group Holdings Limited

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Contact person - Anna Liew

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