Asked by Anonymous
Asked on 24 Feb 2019
Based on what I have read, certain events that would influence how 2019 might turn out have in some sense occured. This includes, but is not limitd to, fed interest rate annoucements and very recent updates on the trade war negotiations from Donald Trump. Perhaps I can just list a few things that we can just look out for.
Interest Rates Hike
The fed increased its target rate 4 times in 2018, which represents an increase in borrowing costs for both consumers and businesses. Investors are also afriad that the new Fed chairman could increase interest rates too much, which affects the overall performance of the stock market.
Recent news and tweets about Trump's response to the trade war has alleviated the markets with a 5% increase on Shanghai equities and ripple effects on other currencies.
Global Economy Growth
China, Japan and EU are showing signs of slowing growth. There are a quite a number of key political events also to look out for, espeically in Europe with Brexit.
In 2018, tech stocks help to push up key benchmarks and bolster up composites but pushed them down when they fell. This could be due to the fact that investors felt that the stocks had been priced too highly and were overvalued. Some tech firms like Apple and Facebook also have their firm specific issues to deal with.
As background, you must understand most rational investors suscribe to the economic theory that the economy moves in a cycle. It is important to note while most economists recognise this, a unifying explaination for this theory is still hotly debated. They believe that a downturn is eminent after markets grow to a point of saturation.
According to many investment analysts and experts, the current world economy seems to be in the late stages of the economic cycle(late boom to pre recession phase). Some predict that a recession is due perhaps late Q2-Q3 2019. Generally Stocks will be impacted the most, spiralling to commodities and properties. Cash, Gold and Bonds are often preferred in times of a economic downturn. Industry wise, I believe none will escape unscathed, though companies dealing with luxury non essential products & services should expect their revenues and earnings to suffer the most.
How bad it will be- and what will trigger it, nobody knows. Whether it will even happen in that time period is also a mystery.