What Should Investors Expect In 2019

With our current political climate, the EU punishing Britain for Brexit, tariffs, trade wars, the Fed raising rates, record government deficits and whatever hysteria the media can create – the crystal ball is full of clutter.

How should investors approach 2019?

We’ve assembled a terrific group of highly regarded experts with excellent track records. Readers want me to use them more proactively for our benefit.

Most New Year predictions are amusing but offer little actionable advice.

Our contributors are on top of their market – held accountable by their readers. When they peer into the future their perspective is how their clients can prosper financially – yet invest safely.

I contacted the dean of the group, Chuck Butler. He is my mentor and I am grateful for all the help he has given us.

DENNIS: Chuck, thanks again for your time. 2019 has a lot of contrasting variables. Let’s break them down and discuss them individually.

Despite warning signs that the economy is slowing, the Fed seems hell-bent on raising rates – until something breaks. You are the best fed-watcher I know. What do you expect in 2019?

CHUCK: Thanks again Dennis for allowing me to give your readers my opinions.

I’ve long said that: I’m a Fed Watcher, I’m a Fed Watcher, watching the Fed do wrong… The Fed is hell bent and whiskey bound to hike rates, giving them enough room to cut when the recession arrives. Rate hikes will continue in 2019 until the recession hits us.

Here is the math… Historically, the average interest rate at the start of a recession is 6.5% and the average amount of rate cut during a recession is 4%.

We are nowhere close to those numbers. Our current rate is 2.25%, soon to be 2.50%. If the Fed continues at the same pace – a year from now, we’ll be at 3.50%. That’s nowhere near where they need to be to fight a recession. I have thoughts about where that will lead us when the recession hits us.

DENNIS: Where might it take us? Inflation seems to be rising despite the phony numbers from the Bureau of Labor Statistics (BLS). Interest rates are rising, which should make the dollar more attractive, hurting exports.

Do you see the fed changing course or slowing down? What markets do you see as vulnerable? Are there markets that grow during these times?

CHUCK: When the recession does hit (I think it’s late in 2019) the Fed will begin to reverse their course on rate hikes. I know you fear politics will come into play. Who knows their real motivation?

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