There are several reasons why the US stock market may be going sideways to down in 2019.
Right now the Central Bank of the United States (The Federal Reserve) has been on a tightening campaign for atleast 2 years.
This tightening campaign is being pursued in 2 ways.
Through increasing the federal funds rate. (Which is now at 2.25% - 2.50%) and
Through selling some of the Central Bank bond portfolio back into the market.
This QT (Quantitative Tightening) has never been pursued this way by the Federal Reserve. In the past they would just raise interest rates and then lower interest rates when the economy began to grow or soften.
Not only will the above affect the stock market but the Donald Trump tax cuts will be factored in, in the first quarter of 2019. This means the tax cuts will not be a further bump in earnings growth.
Lastly the trade war with China will begin to raise prices for goods bought from China. This will begin to be a tax on the United States consumer causing them to not be able to buy as many goods.
These reasons should outline that the US stock market is in a later stage.
What is your opinion about that?
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