"FED should consider reducing the number of interest rates hikes in 2019 against the backdrop of bad signals from the world economy." - said Stanley Druckenmiller, a former Fed board member and currently Duquesne Family Office CEO.
There are enough indicators to suggest that the economy may need a temporary recovery, Druckenmiller said, citing the slowdown in world trade growth and stock market sourcing.
"We believe the US economy can maintain strong results next year, but can not afford a serious political error on both the Fed and the rest of the administration," Druckenmiller said.
What is happening in the current markets?
The SP500 is -11% lower. The banking sector, as the most afflicted, declined by -20%, with the greatest impact on stock indices. The sharp drop in oil has also pulled the indices down, as the energy sector remains the biggest burden in them. Sensitive sectors remain transport, housing and industry, as companies with a high share of external financing.
What do the FED markets expect?
The likelihood of the Fed to raise interest rates tomorrow is estimated at over 80%, suggesting that investors have already accumulated it in the stock price and USD. However, in full contrast, the probability of an increase in 2019 is slightly above 30%. Fed plans 3 rises in 2019, but recent comments from members and a more moderate growth rate in the global economy may prompt central bankers to slow down the rate of interest rate rises.
Photo: CNBC
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