What spooked investors
For investors came as a surprise rhetoric of the fed’s Jerome Powell. Markets had hoped that in 2019 the us regulator will pursue a more accommodative monetary policy. “The fed now provides for 2019 two interest rate increase instead of the three expected. Also, the regulator has lowered the level of neutral long-term rates from 3% to 2.75%, which suggests that the current rate of the US is actually located at the lower end of the neutral range,” explains chief analyst “BCS Premier” Anton Pokatovich.
In connection with the increased volatility in the US stock market investors are clearly counting on a more accommodating monetary policy in 2019, said General Director of “MC Sputnik — capital Management” Alexander Losev. “The market was hoping the fed will soften, as in previous years, when bidding decision factors in favor of the stock market was more important than to benefit the economy. But the new administration doesn’t think so, and rightly so. Powell didn’t even mention the market correction in the final communique,” — said the financier.
The fed made the right decision, and hope for a strong monetary policy easing next year would be silly, agrees the head of Department of trading operations IK “freedom Finance” Igor Kleshnev.
“The regulator so dramatically change the policy will not and should not. The fed monitors the macroeconomic indicators, which are now in order. Given this, the panic, likely linked to the criticism of Donald trump in the fed, who persuaded some of his regular tweets that Powell doesn’t know what he’s doing. But again: this is not so”, — says the expert.
What to invest money
Soon American markets can begin a moderate recovery, so investors now have the opportunity to purchase assets at low prices, said Anton Pokatovich. In his opinion, the wave of sales won’t gain momentum, and investor sentiment is likely to begin to adapt to the change of fed policy.
According to Igor Kleshnev until the end of the year should not occur any extraordinary events, therefore, the markets will calm down soon. “Stock of many companies formed to attractive buying levels. I believe that at current levels the market will find support, and in early 2019 index S&P 500 will trade in the range of 2600 to 2800 points. Volatility will be observed in the course of the season report, but I don’t think the S&P 500 drops below 2600 points, as many companies will present strong data,” explains Clusnet.
Alexander Losev, in turn, is more pessimistic. “The correction is likely to continue, I have no illusions. And investors might need to run on emerging markets and look for something there”, — said the financier. He notes that potential US GDP growth is almost exhausted, and further heating-up of the us economy could lead to a crisis, to prevent which their actions and attempts of the fed.
“This is not the time for investors, this time the real sector. Now, for investors who decide to stay in the U.S. market, are only interested in companies involved in weapons, as they allocated a large part of the budget of the U.S.,” said Losev.
In the current situation on the world markets, investors should think about protecting, for example, to place some share of cash in U.S. dollars, says the Deputy General Director of the National investment management company Andrew Vallejo-Roman. Also, in his opinion, can look at the papers from defensive sectors of the U.S. economy, that is, companies that serve utilities, manufacturing and so on.
“To invest in emerging markets should probably be treated with caution, as their dynamics will greatly depend on the strength or weakness of the dollar against other world currencies,” he concludes.