REVEALED: 3 Wild Market Predictions for 2019
A new year is upon us.
It is time to ring out the old, as Tennyson counseled — and ring in the new.
So today we retrieve our crystal ball from mothballed storage… and gaze for previews of 2019.
Is this finally the year of the bear? Or will the bulls roar back to life?
Are we months away from recession? Years away? Or days away?
The shocking answers anon.
But before we chart the way ahead, let us first take stock of where we stand today.
Stocks concluded the year with their worst December since the Great Depression.
Both the Dow Jones and S&P came within an ace of tumbling into bear markets — a bear market defined as a 20% fall from the most recent height.
Only a fevered Dec. 26 rally kept the bears officially at bay.
But what was responsible for the Dow’s 1,086-point leap?
The folks at Phoenix Capital sniff a rodent:
“Someone” took advantage of the extremely light holiday volume to ramp markets higher via indiscriminate buying…
This was a clear and obvious buying program made by “someone” who didn’t want stocks to officially enter a bear market by falling 20%. One of the key “tells” that this was manipulation is that underperformers like banks and homebuilders didn’t lead the rally.
Normally during real market bottoms, the underperformers turn first and rally hardest as REAL buyers and value investors put in REAL buy orders.
That didn’t happen. Both sectors lagged on the bounce.
But who might this “someone” be? And why the hijinks?
We’ve put our agents on the case.
In the meantime one fact remains, clear as gin:
Global stock markets hemorrhaged $12 trillion in 2018.
These were the largest losses since 2008 — and the second largest on record.
And so markets stagger into 2019 bloodied, battered, bandaged… like Napoleon limping home from Russia.
The new year began this morning where the old one ended, with stocks in retreat.
Weak manufacturing data out of China and Europe came out overnight, confirming the global economy is grinding to a crawl.
Stocks later rallied on rising oil prices. Our friends the Saudis are reportedly cutting exports, lifting energy stocks.
The Dow Jones, S&P and Nasdaq all scratched out modest gains by the closing bell.
But what will determine the fate of markets this year?
Analyst Adam Shell in USA Today:
“Market returns in 2019 will hinge on Fed interest rate policy, whether the economy can continue to grow and avoid recession and whether the U.S. trade fight with China can be resolved.”
But doesn’t hinge No. 2 pivot upon hinge No. 1? And is either truly independent of hinge No. 3?
What are the odds of them all swinging in the right direction this year?
The Federal Reserve has given every indication it will proceed with additional rate hikes this year — at least two.
Incidentally… rate hikes are not generally considered antidotes to bear markets.
Peter Boockvar, CIO at Bleakley Advisory Group, says forget the technical definition of a bear market.
Stocks are already sunk in one — and will be for a good long time:
“We are in a bear market, and a bear market is not just going to end in a couple of months considering the 10 years of a bull market.”
Assume for the moment a bear market is upon us.
When might it end?
From our trading desk weighs in Greg Guenthner of The Rude Awakening:
The first half of 2019 will feature negative headlines about the trade war, rising rates, a stalling housing market and an economic slowdown that will contribute to wild swings and bear market action. Trade war fears and other political shenanigans dominate the news cycle and stocks will suffer.
So much for the first half of 2019. What about the second half?
But when the worst-case scenarios don’t materialize and the last seller turns out the lights, stocks will bottom and a new rally will begin, leading to a strong fourth-quarter performance.
We are not convinced.
So now we come to our own jaw-dropping predictions for 2019 — predictions guaranteed to knock you to the floor…
Prediction No. 1:
In 2019 the stock market will rise. Or fall.
Or — or — it will end the year precisely where it began.
Prediction No. 2:
Bitcoin, gold, oil, United States Treasury notes and all remaining assets will rise, fall, or hold steady.
Prediction No. 3:
The economy will expand in 2019 — unless it contracts.
Bear in mind… the economy may do neither.
There you are — three thundering predictions for 2019.
And remember, fortune favors the bold.
What’s your big market prediction for 2019?
Let us know: firstname.lastname@example.org.
Below, Robert Kiyosaki shows you his 2019 outlook. Is this the year the bubble finally bursts? How should you approach this year? Read on.
Managing editor, The Daily Reckoning