Looking Forward to the American Market: Decelerated Growth, the Stock Market may be the Bull Market (I)

Looking back on 2018, the US economy is very eye-catching, and the stock market has also set a record for the longest bull market in history. However, since the second half of the year, the market has been overcast, and investors have been closely watching the potential recession in the US and the potential for the bull market to come to an end. Looking into the 2019, Wall Street’s major investment banks generally expect the US economic growth rate to slow down,square steel tubing inflation pressures gradually appear, and the Fed rate hike is expected to bring more pressure on the financial market.

The key question of the US economy: Is the slowdown inevitable?

Looking forward to 2019, Wall Street’s major investment banks agreed that the US economy will slow down significantly by then, and this year’s level of nearly 3% will fall sharply. By 2020, the US economy will further weaken. JPMorgan believes that with the gradual decline of fiscal and monetary stimulus effects and the negative drag of trade policies, the US economic growth will slow down significantly next year. Goldman Sachs expects that by the end of 2019, the US core PCE price index will gradually rise to a level of about 2.25%, which means that the US economy must slow down from the current 3.5% growth rate as early as possible to the expected trend growth rate of 1.75%. In order to “cool down” the growth momentum of the United States, the market is likely to see a sharp tightening of the financial environment. tin plate suppliers Most institutions are not expecting a recession. Morgan Stanley believes that although the economic growth rate has slowed down in 2019, the Fed stopped to raise interest rates to cope with downside risks, and the probability of recession is only 15%.

Despite this, Societe Generale and Credit Suisse still hold high the banner of “recession in sight”. Societe General even bluntly said, “The recession will still come, but it has only been postponed for two quarters.” Credit Suisse believes that a salary increase of 3.5% will be a very dangerous sign of recession. Specifically, if the salary growth rate soars between 3.5% and 3.7%, the US economic growth rate will slow down to below the trend level after one year. In addition, Credit Suisse also expects the US bond yield curve to be upside down in mid-2019, which also indicates that the US economy will slip into recession by mid-2020.

Since the current round of monetary policy tightening cycle in December 2015, Steel Pipe Suppliers the Fed has now raised interest rates eight times, and the federal funds target interest rate range has been revised to 2%-2.25%. At present, the Fed’s interest rate hike in December has been considered by the market to be a nail. In the coming year, Goldman Sachs and JPMorgan Chase will agree that the Fed will raise interest rates four times before the end of the year and raise interest rates to 3.25% to 3.5%. Goldman Sachs also pointed out that as the employment situation is still super good, the Fed is likely to maintain the rate hike before the unemployment rate rebounds, and is expected to continue until 2020.

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