Prudential market experts expect significant growth in the financial markets in 2014 as the U.S. and global economies continue to recover amid central bank actions, low inflation and an improved business climate. They outlined their views at Prudential Financial, Inc.'s (NYSE:PRU) 2014 Global Economic and Retirement Outlook briefing in New York today.
A replay of the outlook briefing is available on
Ed Keon, managing director of Quantitative Management Associates, said the more global markets and economies improve, the more they begin to resemble their pre-2008 levels. He expects significant growth in 2014 driven in part by technological innovations and a possible positive “shock” in energy production in the U.S. and around the world. He expects the Federal Reserve to remain on the sidelines for the next couple of years, keeping interest rates low, even as it begins to taper its bond-buying program.
“The new normal is beginning to look like the old normal. We’ve seen significant growth in 2013 and we’re now experiencing a robust economy that we used to think of as normal,” Keon said.
However he warns investors not to be complacent.
“The key to investing is to think one or two moves ahead of the market. Our asset allocation portfolios remain heavily overweight in stocks today, but our research is focused on factors that might cause the next bear market. By preparing for the eventual downturn and evaluating when and why it might happen, we can more confidently harvest the gains while this bull market runs. For now, we think the most likely causes of a new bear, high inflation and/or contractionary monetary policy, are well down the road.”
Quincy Krosby, a Prudential market strategist, is also cautiously optimistic about 2014, noting that a major focus for U.S. investors will be the change in leadership at the Federal Reserve from outgoing chairman Ben Bernanke to Janet Yellen. Additionally, she believes many investors will be looking for opportunities outside the U.S. in places such as Japan where it remains to be seen whether continued quantitative easing will ultimately prove successful.