2019 Forecast: The Storm Before the Calm

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In 2019 we expect, and prudent investors should prepare for, “the storm before the calm” — tighter monetary conditions, uncertainty that includes a “disorderly Brexit” and increasing tensions between China and the United States on multiple fronts. We expect a storm though, nothing more.

  • Exceptionally strong economic growth has prompted the Fed to raise interest rates, reduce the balance sheet and generally to “Rip the Bandaid Off” from a zero rate environment.
  • The subsequent surge in volatility is cleaning house from rampant speculation that needed to be unwound - setting the stage for a healthier and calmer market in the future.
  • Two of the “Big 3” — China and the Eurozone — are struggling for geopolitical reasons but also due to the U.S. regaining its ranking as the most competitive country in the world.
  • Investors should prepare for the “storm” of tighter monetary conditions and greater geopolitical uncertainty but not at the expense of losing sight of our forecasted “calm” outlook.
  • Diversify, be disciplined and do not forget your ABCs — which in our 2019 forecast extend all the way to J-Jobs.

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