Our monetary policy forecast stays the same. In short, we believe that the FED will raise more times and to a greater degree than the consensus three rate rises forecast.
Thus, equity investors should take precautions since we see four (4) rate rises with perhaps a greater incremental rate rise than expectations. Some of the factors behind our forecast are:
- Full employment and beyond for the US.
- Clues in the commodity and oil markets that we are nearly at the end of the cycle.
- Fiscal stimulus in the form of Trump infrastructure plan will hasten the pressure of the FED rate rises.