IN THIS ISSUE:

1. Fed Chairman Suggests Rate Hikes Could End Soon
2. Recession Fears Continue to Grow – The Question is, Why?
3. Presidents Trump, Xi Agree to Temporary Truce in Trade War

Overview

In a speech last Wednesday, Fed Chairman Jerome Powell surprised the world with a reversal of his hawkish rhetoric regarding additional interest rate hikes. While another quarter-point rate hike is expected on December 19, most Fed-watchers now expect only one or two rate hikes in 2019. Stocks rallied strongly on the news.

On another subject, more and more forecasters believe we will have a recession beginning late next year or early in 2020. Yet the facts just don’t support these predictions. This is the second longest economic recovery on record and will become the longest if it continues next year. It is for this reason that some analysts assume a recession is coming soon, even if there is no evidence of it at this point.

Finally, President Trump and China’s President Xi didn’t reach an agreement to end the trade war at the G-20 Summit last weekend, as I predicted. But they did agree to a 90-day truce on additional tariffs and further negotiations on ending the trade war. We’ll see how that goes. The truce was enough to boost equity markets around the world.

Fed Chairman Suggests Rate Hikes Could End Soon

The most important development over the last week came on Wednesday in a speech delivered by Federal Reserve Chairman Jerome Powell. With just two words, the Fed’s leader sent stocks surging by raising hopes that the central bank might be close to ending its push to drive up interest rates.