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The economy could shock all the bears in 2020

Brian Sozzi
Editor-at-Large

Sometimes being contrarian in markets pays off handsomely. And that appears to be the line of thinking at the world’s largest asset manager BlackRock as the calendar gets ready to turn to 2020.

BlackRock global chief investment strategist Mike Pyle tells Yahoo Finance he thinks the U.S. economy will likely strengthen going into the new year. His reasons are solid, and frankly refreshing amidst all the doom and gloom forecasts permeating markets as trade conditions with China continue to be tepid at best.

“Clearly to put the cautions out there, risks have risen. Manufacturing has slowed down globally and clearly slowed down in the U.S. substantially. We are seeing some initial signs of that spilling over into the consumer. But to us, this reminds us of that period in 2015/2016 when we saw global manufacturing slowdown, it infected the U.S. and we even saw the consumer slow down a little bit then too. But that underlying resilience of the consumer ultimately kind of carried the day,” Pyle explained on Yahoo Finance’s The First Trade.

Pyle added, “With the Fed being more accommodative, we are seeing the housing market pick back up, housing activity pick back up. And we think that will be enough to see us through as we get into 2020.”

The top strategist continues to be bullish on U.S. stocks over emerging market debt.

Suffice it to say, Pyle’s view is the minority on Wall Street based on Yahoo Finance’s conversations over the past month.

Many sources have indicated U.S. economic growth continuing to slow in the fourth quarter from about a 1.5% third quarter clip, held back by a cooling in consumer spending and trade war tensions crimping capital investment at companies. The lukewarm momentum is largely expected to be sustained into 2020, with most market pros pegging U.S. GDP growth in the 1.5% to 2% range for the year due to the U.S.-China trade war lingering on.

There is evidence though that some market goers agree with Pyle’s investment thesis the U.S. consumer — and economy — will surprisingly gain momentum into 2020.

Several of the biggest breakouts of late in the S&P 500 1500 have come from the consumer discretionary space, according to Renaissance Macro. The researchers at RenMac are also seeing a “surge” in the percentage of stocks making 52-week highs in the consumer durables and apparel sectors to the best level in over a year.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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