Wells Fargo Investment Institute outlines a broad macro and market framework using chart-driven analysis, focusing on growth trends, inflation dynamics, and asset class positioning. The piece challenges consensus views by suggesting late-cycle conditions may persist longer than expected, even as risks build beneath the surface.
Third Quarter 2019 Market Charts
Wells Fargo
Research
111 Pages
Key Takeaways
Late Cycle Extension: Economic expansions have averaged ~5 years historically, yet the current cycle has stretched beyond 10 years, suggesting unusual durability with rising downside risks.
Equity Valuation Pressure: Forward P/E ratios near 16–18x exceed long-term averages of ~15x, implying limited upside if earnings growth slows.
Inflation Moderation Trend: CPI readings declining from ~2.9% to near 2.0% signal easing pressures, though policy shifts could quickly reverse this trajectory.
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