There are more than enough things in the world for investors to stress over, and Deutsche Bank’s top economist laid out his Top 20 biggest stock market risks for 2020 for you to ponder.
Growing wealth inequality checked in at No. 1 on the list, and the ongoing trade war between the world’s two largest economies, the U.S. and China, ranks high at No. 2, along with several other peripheral issues taking other spots on the list.
“They are all important at different horizons,” Deutsche Bank economist Torsten Slok, who wrote the list, told MarketWatch, “but a continued rise in inequality and associated political response is something investors can no longer ignore.”
Deutsche Bank’s Top 20 Risks to the Stock Market in 2020:
- Continued increase in wealth inequality, income inequality and health care inequality
- Phase one trade deal remains unsigned, continued uncertainty about what comes after phase one
- Trade war uncertainty continues to weigh on corporate capex decisions
- Ongoing slow growth in China, Europe and Japan triggering significant U.S. dollar appreciation
- Impeachment uncertainty and possible government shutdown
- U.S. election uncertainty and the implications for taxes, regulation and capex spending
- Antitrust, privacy and tech regulation
- Foreigners lose appetite for U.S. credit and U.S. Treasurys following the presidential election
- MMT-style fiscal expansion boosts growth significantly in U.S. and/or Europe
- U.S. government debt levels begin to matter for long rates
- Mismatch between demand and supply in T-bills, another repo rate spike
- Fed reluctant to cut rates in election year
- Credit conditions tighten with more differentiation between CCC and BBB corporate credit
- Credit conditions tighten with more differentiation between CCC and BBB consumer credit
- Fallen angels: more companies falling into BBB, and out of BBB and into HY
- More negative-yielding debt sends global investors on renewed hunt for yield in U.S. credit
- Declining corporate profits means fewer dollars available for buybacks
- Shrinking global auto industry a risk for global markets and economy
- House price crashes in Australia, Canada and Sweden
- Brexit uncertainty persists
