From ballooning debt to the rise of cryptocurrency, what’s ahead for the economy and markets in 2020?
White maintained that cryptocurrencies are going to be a big topic of interest — and regulatory scrutiny. He pointed out that people who dismissed Libra’s antecedent as a passing fad were proven wrong.
“Governments are thinking, how do we regulate this? Should we be creating our own digital currencies?” The existence, albeit nascent, of hundreds of other would-be contenders in the space show that cryptocurrencies are going to grow in both visibility and real financial impact, White predicted.Many economists hold the view that ultra-low interest rates have helped propel the bull market into unprecedented territory, but that could change in 2020.
This has potentially market-shifting implications for highly leveraged companies. “The corporate debt situation, because of where rates are, is something we have to be mindful of,” said John Lynch, chief investment strategist at LPL Financial. “You have half the Bloomberg Barclays investment grade index literally a step away from junk.”
This could also create a downward spiral for indebted households, Piegza said. “I don’t know if we ever got to the point where consumers really cleaned off their household balance sheets enough. The way the U.S. economy has grown out of recession is by the consumer taking on new amounts of debt.” With corporate appetite for investment at a trough thanks to uncertainty over trade issues, consumers are the primary force still keeping the economy in drive.
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