Art Cashin’s predictions for 2019: Fed won’t hike and there’s an ‘outside chance’ they cut rates

Trader Talk

I sat down with UBS’ Art Cashin at the bar at Bobby Van’s steakhouse across the street from the NYSE for our annual look back/look ahead.

Art and I both agree that the big story for 2018 was the return of volatility.

Here are Art’s thoughts on what’s in store for 2019.

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“I think perhaps the Fed will not hike ever again in 2019…If you go back and look at what I said both in our interview and with you time and time again, I have been a bear on yields. I think that the Fed — is somewhat misreading what’s going on. Yields are not going much higher and — there’s an outside chance that they cut before the end of 2019.”

“I think it will be very volatile, and — for the first half — probably flat to down as the Fed and others grapple with what they want to do.”

“Time is running out. They’re gonna have to make a decision in late spring. I think Brexit will be forced upon ’em and it will not be comfortable. I think people will be surprised at how disruptive it is.”

“I think they may walk back from the tariffs that are threatened, but I think the global economy may shrink somewhat. It’s already begun to shrink. China’s seeing it — its exports go down, but perversely, not with America yet. That’s to come. It– the–the exports are going down with Europe. So the global economy is slowing. 2019 is going to be somewhat of a difficult year.”

“I don’t believe so. I think we will get something that approximates it, and you’ll get perhaps in mid-year a relaxation rally, but– with–with the problems of– political sequencing, whatever, I don’t think it works out.”

“That will be difficult to find, and — and if anything I would think, and I’m not an economist, that instead of 3 percent or better growth you’re probably gonna get way back to 1.5 percent or 1.7 percent, and — and things will slow down.”

“He will be a bit of a problem in the first half and he will bend over backwards to try to be a big help to it in the second half. Whether that’s effective or not, I don’t know.”

“I don’t know. It’s a terrific gamble for them because if it passes it’s not vastly different than NAFTA, so it will keep the economy and the exchanges working well. If the Democrats choose to really fight, it could very disruptive of the biggest trade area in the world.”

As for Art’s 2018 predictions, I give high marks for his three core predictions:

  1. China could interrupt the synchronized global growth story. RIGHT
  2. The Fed: the risk is that inflation remains too low. HALF RIGHT (inflation moved toward the Fed’s target but was still shy)
  3. Bitcoin will not work out the way the bitcoin enthusiasts think it will. RIGHT

Not bad, given how low the accuracy rate of most predictions are.

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