Knight Bridge Investment Consultants Limited – A Reprieve in the US Markets?

HONG KONG - Nov. 21, 2018 - PRLog -- The S&P 500 rose 0.3%, or 8.04 points, as of market close. The Nasdaq advanced 0.92%, or 63.43 points. The Dow was little changed and fell less than 1 point at the close, erasing gains of more than 200 points at the intraday high.

On Tuesday, an equity selloff turned the S&P 500 and the Dow negative for the year. Both indices are still lower for the year-to-date as of Wednesday's close.

In the wake of Tuesday's massive sell-off, some investors have questioned whether the Federal Reserve will maintain its current path of planned rate hikes. However, since 1994, the Fed has responded with more accommodative policy only when other financial conditions, such as credit spreads have also deteriorated substantially or when growth is below its potential.

"We expect the Fed to hike at the December meeting despite the recent stock market decline, with a subjective probability of 90%," a KBICL advisor said. "Subsequent moves will depend on the data, but our baseline forecast remains four more hikes in 2019 with risks that are broadly balanced."

While the U.S. economy grew at a faster-than-expected pace of 3.5% in the third quarter, that breakneck expansion isn't expected to last, according to some forecasters. Global economic growth has already peaked and will slow in the coming years, the Organisation for Economic Co-Operation and Development (OECD) said in its latest report. The world economy will expand by 3.7% this year, but growth will decelerate to 3.5% in the following two years, the Paris, France–based economic organization said in its downwardly revised forecast.

The OECD predicts that US growth will be 2.9% in 2018, but will then slow to 2.7% and 2.1% growth in 2019 and 2020, respectively. Trade tensions are primarily to blame, according to the OECD, with protectionist policies already contributing to a 0.1 to 0.2 percentage point decline in global GDP this year.

The International Monetary Fund in early October slashed its prediction for 2018 global economic growth to 3.7% from 3.9%, citing trade tensions and emerging market instability. The IMF foresees U.S. growth of 2.9% in 2018, followed by a deceleration to 2.5% in 2019.

Jordan Holmes, head of economic research, wrote in a note Tuesday that the outlook for 2019 revolves around four tensions: U.S. strength versus sluggishness in the rest of the world, macroeconomic policy supports versus geopolitical drags, robust corporate profits versus capital expenditure growth and rising wage inflation versus a flat CPI Phillips curve.

"The economic outlook for 2019 revolves around the expansion's resiliency in the face of these four tensions," Holmes said. "Our baseline forecast judges the fundamental backdrop as healthy. Income is growing in a balanced manner, credit is flowing relatively easily, and fiscal and monetary policies remain supportive."

To find out more information on the opportunities Knight Bridge Investment Consultants see's within the US markets, specifically with IPO's or other performing sectors, visit www.knightbridgeinvestment.com or contact us at info@knightbridgeinvestment.com for further information.