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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.Â
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 Number 6: Inflation Will Return to 3% in 2020
With global growth returning, the U.S. economy surging to a 3% growth rate, U.S. rates on the rise, and the U.S. dollar sinking, it will lead to the return of inflation in 2020.Â
Since peaking at 2.94% in July 2018, the y/y change in the consumer price index has been steadily declining. The falling rate of inflation can be directly tied to the strengthening of the U.S. dollar, with the dollar index surging by 11.5% since May 2018.Â
Additionally, the y/y changes in the producer price index have declined sharply as well since July 2018 after peaking at roughly 4.2%.
The declining rates of inflation can directly be tied to the value of the dollar index, which has soared in value starting in April 2018. If the dollar weakens as we have previously noted in prediction 7, then it seems likely that inflation rates should rise as well.
Then there is the reality that the Fed has noted it was willing to let inflation run ahead of its symmetric 2% target, which means even if CPI and PPI run hotter and approach their 2018 highs, the Fed is unlikely to raise rates.
It means that inflation rates in 2020 are likely to jump with CPI year-over-year rates pacing around 3%.
In this low inflation world a 3% rate is welcomed and unlikely to do much if any damage to the overall US economy or the stock market.Â
Have a good one.
-Mike
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. Â
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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