LPL Financial Research Publishes Outlook 2015

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Outlook Features Economic and Markets Forecasts and Investment Insights

LPL Financial LLC, the nation's largest independent broker-dealer*, a custodian for registered investment advisors (RIAs), and a wholly owned subsidiary of LPL Financial Holdings Inc., has announced that its research publication, Outlook 2015: In Transit, is now available for download. Published by the LPL Financial Research department, the publication contains economic and market forecasts and investment insights for the year ahead.

In its publication, LPL Financial Research notes that it expects 2015 to be marked by transitions. Likely changes in monetary policy around the world, the return of volatility, and the recent shift in the political balance of Congress could mean 2015 is a year that will have the global economy, markets, and central banks all on the move, the report explains.

Significant elements that will be in transit in 2015 include:

  •     The U.S. economy. We expect the U.S. economy will continue its transition from the slow gross domestic product (GDP) growth of 2011–2013 to more sustained, broad-based growth.
  •     Central banks. The U.S. economy is likely to travel toward a point where the Federal Reserve will begin raising interest rates, albeit slowly, for the first time in nine years. The Eurozone and Japan could benefit, as their central banks embark on more aggressive policy actions to improve their economies.
  •     Washington. The Republican takeover in the Senate and approaching debt ceiling limit might provide the opportunity for more movement in Washington.

Against this backdrop, LPL Financial Research forecasts the following:

  •     LPL Research expects the U.S. economy to continue its transition from the slow gross domestic product (GDP) growth of 2011–2013 to more sustained, broad-based growth. We expect the U.S. economy will expand at a rate of 3 percent or slightly higher in 2015, which matches the average growth rate over the past 50 years. This forecast is based on contributions from consumer spending, business capital spending, and housing, which are poised to advance at historically average or better growth rates in 2015. Net exports and the government sector should trail behind.
  •     LPL Research expects 5–9 percent stock market returns. We believe stocks—tempered by increasing levels of volatility—will navigate the various cycles in transit and deliver mid- to high-single-digit returns in 2015, with a focus on earnings over valuations. This forecast would be in-line with the average stock market growth of 7–9 percent, since WWII. Supported by improved global economic growth and stable profit margins in 2015, we expect earnings per share growth for S&P 500 companies of 5–10%. We believe continued economic growth, benign global monetary policy, and a more favorable policy climate from Washington indicate that the powerful, nearly six-year-old bull market should continue.
  •     LPL Research expects flat returns in the bond market. With sustained improvement in economic growth, slowly rising inflation, and the approach of the Federal Reserve’s first interest-rate hike, bond prices are likely to decline in 2015. High-yield bonds and bank loans can help investors manage this challenging bond market.

“Transition, like we forecast and describe in this publication, is just another word for change. While we believe the backdrop looks favorable for continued economic and market advances, we know that not all change is good, just as not all movement is forward,” said Chief Investment Officer Burt White. “For investors, we believe a key to their success is keeping their emotions in check when confronted with a bumpy road in 2015. It is human nature to weigh the market potholes substantially more than the long, smooth roads of strong market returns between them; however, with an investment strategy in hand and a destination in mind, we believe 2015 is poised to be a volatile but potentially favorable year for investors.”

To help investors prepare for an expected market in transition, LPL Financial Research has compiled timely advice into its Outlook 2015: In Transit ahead of what could likely be another year marked with positive advances by stocks, flat returns for bonds, heightened volatility, and strong U.S. economic growth.

Read the Full Publication: http://lplfinancial.lpl.com/Documents/ResearchPublications/Outlook%202015.pdf

About LPL Financial Research
LPL Research, led by Managing Director and Chief Investment Officer Burt White, provides strategic, objective investment insights for all advisors who leverage the LPL Research platforms. LPL Research’s mission is to be a trusted partner to our advisors who provide investors with choices to help meet their financial goals. The team provides market, investment management, and due diligence advice. LPL Research’s Outlook publications, produced twice annually, serve as the backdrop for all of the team’s investment recommendations and communications efforts for the year ahead.

About LPL Financial
LPL Financial, a wholly owned subsidiary of LPL Financial Holdings Inc., is a leader in the financial advice market and serves $465 billion in retail assets. The Company provides proprietary technology, comprehensive clearing and compliance services, practice management programs and training, and independent research to more than 13,900 independent financial advisors and more than 700 banks and credit unions. LPL Financial is the nation's largest independent broker-dealer since 1996 (*based on total revenues, Financial Planning magazine, June 1996-2014), is one of the fastest growing RIA custodians with $84 billion in retail assets served as of September 30, 2014, and acts as an independent consultant to more than 40,000 retirement plans with approximately $110 billion in retirement plan assets served. In addition, LPL Financial supports approximately 4,400 financial advisors licensed with insurance companies by providing customized clearing, advisory platforms and technology solutions. LPL Financial and its affiliates have 3,397 employees with primary offices in Boston, Charlotte, and San Diego. For more information, please visit http://www.lpl.com.

Important Risks
Economic forecasts set forth may not develop as predicted.

High-yield bonds are subject to higher interest rates, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Stock investing involves risk including loss of principal.

Indexes are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.

Securities and advisory services offered through LPL Financial. A registered investment advisor, member FINRA/SIPC.

Contact Information:
Christine Cannon
(631) 776-0247
ccannon(at)markettalknow(dot)com

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Amanda Keating
LPL Financial
+1 (202) 441-5332
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