2019 is coming a close, and now as we turn towards next year, I present to you a list of 10 stock market predictions for 2020. You can review my list of top 10 predictions for previous years 2016, 2017, 2018, and 2019 to see how I did.
As I did last year, I will start with number 10 and work our way up to number 1 over the final month of 2019. Enjoy!
Prediction 3: The Fed Will Raise Interest Rates One Time In 2020
With global growth returning, the U.S. economy surging to a 3% growth rate, U.S. rates on the rise, the U.S. dollar sinking, the return of inflation, commodities prices soaring, and the reflation trade in full force, it will result in the Fed to move off the sidelines and raises interest rates by 25 basis points in 2020.
The Fed moved to the sidelines in 2019 after cutting rates three times. Now with the return of growth and inflation, the Fed will be forced to act. The Fed has noted it was willing to let the inflation rate run above its symmetric 2% target. However, with commodity prices on the rise and inflaton rates ticking up, the Fed will have no choice but to raise rates by 25 bps to a range of 1.75% to 2%.
But the Fed will not want to be the focal point during a Presidental election year, and so it will do what it must and hold-off from raising rates until after the election. That means the Fed will wait until its meeting at the end of December to push rates up.
It makes the Fed raising rates one-time in 2020 prediction 3.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.