Investors don’t need to pay attention to the government shutdown, Brexit or the ongoing trade war with China.
Just two things matter to the market in 2019: the Fed and company earnings.
“I think three months from now investors will be sitting back and won’t remember the shutdown,” co-chief investment strategist for PNC Financial Jeff Mills told Allison Kosik on CNN Business’ “Markets Now” live show on Wednesday.
Mills told Kosik the markets already have priced in much of the pain associated with global trade tensions when the Dow and S&P experienced deep declines in December.
“I think what happened at the end of the year last year is that the market started to price in an earnings recession this year,” Mills said. “We think growth is more likely in 2019.”
For the markets to sustain their January 2019 rally, company earnings will need to remain stable, Mills said, and Federal Reserve Chairman Jerome Powell will need to stick with a more dovish monetary policy and not raise rates aggressively.
Mills believes earnings will get a boost. He predicted investors will be surprised by a quick end to a trade war between China and the United States in the early part of the year. President Donald Trump will be forced by economic conditions to call an end to his standoff in order to protect his reelection chances, Mills said.
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