Join us this evening to see how two market experts are preparing for all the question marks coming our way in 2020 and how you can do better than an Index fund
As the year draws to a close, uncertainty has crept back into the market …
Earlier this fall, we noted how three of the biggest question marks looming over the market had largely been addressed — specifically, 3rd quarter earnings, the Fed’s interest rate policy, and the trade war (for the moment).
Since the market hates uncertainty, when much of the mystery surrounding these issues was temporarily resolved in a positive way, we suggested the markets would rally as the year closed out.
This has largely played out as expected up to this point.
But with only a few weeks left in the year — and one of them being a light holiday week — it’s time to turn to 2020 … and the reemergence of big questions facing investors.
Actually, let’s hold off on 2020 for the moment. Even this week there are significant question marks …
How will the two articles of impeachment that House Democrats just unveiled against President Trump play out … and how will that affect the market?
Will the Fed hold rates steady as expected at tomorrow’s final policy meeting of the year?
How will the Brexit drama continue to unfold in Thursday’s U.K. general election?
What will the ECB do on Thursday, with its final policy meeting of 2019?
What will happen between the U.S. and China as this coming Saturday’s tariff deadline rapidly approaches?
Will there be any dramatic twists in the ongoing protests in Hong Kong?
To top it all off, this week we have economic reports that will reveal details on producer/consumer prices and retail sales.
Phew.
Let’s jump straight to the punchline …
This week’s question marks just scratch the surface on a slew of uncertainties hurdling toward investors in 2020. That’s why Louis Navellier and Matt McCall are holding a special event tonight, the Early Warning Summit 2020, to discuss how investors should be positioning themselves.
For any newer Digest readers, Louis is one of the pioneering founders of quantitative analysis. That’s the practice of using predictive algorithms to forecast major moves in stocks and in the broad markets.
His models have correctly predicted three of the biggest corrections of the past 25 years including Black Monday in 1987, the dotcom crash in 2000 and the 2008 financial crisis.
Matt is an accomplished thematic investor, who literally wrote the book on the bull market we’re currently enjoying. Back in 2009, he authored “The Next Great Bull Market.” It forecasted many of the megatrends we’re now seeing unfold today — like the rise of solar and precision medicine …
Over the past 10 years, Matt has found over 200 stocks that have gone up 100% to 999%.
It turns out both Louis and Matt share the same, strong conviction about how the markets will play out next year — which is interesting, given their different approaches to the market.
So, in today’s Digest, let’s profile a few of the big 2020 question marks, then give you all the details you need to join Louis and Matt at 7 p.m. (EST) tonight for their Early Warning Summit 2020.
If you want a leg up on what’s coming next year, don’t miss this one.
***Will this past summer’s yield curve inversion come back to haunt us?
Back in August, the granddaddy yield curve inversion of them all — involving the 10-year Treasury and the 2-year U.S. note — officially triggered.
This inversion has been heralded by many as a recession indicator.
In fact, according to Credit Suisse, there have been five inversions of the 2-year and 10-year yields since 1978. All were precursors to a recession.
But as we’ve noted here in the Digest, there’s a reason why “this time it’s different” could apply — namely, capital flight. Basically, huge volumes of foreign capital, seeking better returns than the negative rates in their own countries, have flooded into the U.S. The argument is this has pushed down yields, resulting in the inversion.
Is that truly what happened? Or will history repeat itself, and this will end in a 2020 recession?
***Will slowing global growth lead to a global recession?
As Louis often writes, the United States is the oasis around the world.
There’s chaos in Europe right now. Plus, there’s been a major slowdown in China, and Japan, Italy and now Germany have fallen into a recession. And, of course, there’s Brexit — the most chaotic mess of them all.
In September, the purchasing managers index (PMI) for the European Union slipped to an 83-month low of 45.6, down from 47 in August. Even worse, Germany’s manufacturing PMI dropped to 41.4 in September, down from 43.5 in August. That’s the lowest level in more than a decade (any reading under 50 signals a contraction). So, it’s clear Europe is facing a decline in economic growth.
Meanwhile, in the third quarter of 2018, Japan’s GDP fell 2%. And China’s GDP has fallen to the slowest growth levels since the early 1990s.
Our world has never been more interconnected. So, if this global weakness continues, how long can the U.S. remain this oasis? At what point could the economic contagion affect our economy and stock market?
***How will the presidential vote affect the stock market?
If you’ve been following the Democrat presidential hopefuls, you’re aware of Elizabeth Warren’s position on billionaires and government-sponsored social programs — very much against the first, and very much in favor of the second.
You may be less familiar with Leon Cooperman — one of the most successful money managers in America, with a net worth in the billions.
He and Warren have been battling it out over Warren’s proposed wealth tax. Commenting on the presidential race, Cooperman said “They won’t open the stock market if Elizabeth Warren is the next president.”
Would a Warren victory, in fact, be bad for the stock market? Consider that one of Warren’s desired policy changes is a tax on unrealized stock market gains for top-earners. If that’s ever put into place, how long before such a policy threatens to trickle down and affect everyday investors?
If you don’t think that can happen, I’d encourage you to read about the Alternative Minimum Tax (AMT). It’s beyond the scope of this Digest to get into all the details, but just to raise your curiosity …
The AMT was enacted in 1969 following the revelation that 155 people with adjusted gross income above $200,000 had paid no federal income tax on their 1967 tax returns due to various deductions. So, the original goal of the AMT was to capture a small number of wealthy taxpayers who were avoiding income taxes.
But the income threshold at which the AMT kicked in wasn’t indexed for inflation. It stayed the same year after year, resulting in more and more middle-income taxpayers getting caught in it as they earned incrementally more.
What began in 1969 as a way to target 155 high-earners turned into a tax hitting 5.2 million American households by 2017. If a president begins taxing unrealized gains, we all might feel that pain eventually.
But returning to the main question — how will the presidential election affect the market?
***What if the U.S./China trade war isn’t resolved … or gets worse?
As we’ve noted here in the Digest, the trade war with China isn’t solely about trade. The far greater issue is which country will be the leader of tomorrow’s cutting-edge technologies … which will have huge repercussions on the respective countries’ economies and national security.
This coming Saturday is the latest deadline in the trade war. The U.S. is set to impose a 15% tariff on roughly $160 billion in Chinese goods shipped here.
Will this happen, or will the Phase One trade deal we’ve heard so much about actually be reached?
Regardless, what will 2020 bring in terms of a bigger, more meaningful resolution?
***Find out how two market experts see these issues playing out tonight
At this evening’s Early Warning Summit 2020, you’ll hear Louis and Matt answer these questions, while also discussing what market-moves they see coming in 2020.
The event is 100% free. Even if you’re comfortable with how your portfolio is positioned, tune in simply to learn what two professional investors believe is in store for the markets.
And if you’re asking “who are these guys to make predictions?” beyond the string of winners they’ve recommended for subscribers, it’s interesting to note that this time last year, CNN‘s Richard Quest interviewed Matt McCall. Matt predicted that in 2019, the S&P would rise by 25% at some point. Quest disagreed …
So, where is the S&P over the last few days?
Up 25% on the year.
If you’re nervous about how your money is invested, tonight is a must-attend event. It’s your chance to see what’s coming in 2020 … and start preparing.
You can reserve your free seat by clicking here. We’ll see you there.
Have a good evening,
Jeff Remsburg
