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Why End of 2019 Could Loom as Scary For the Economy

Federal Reserve Chairman Jerome Powell doesn't seem too worried about a recession, but one former Federal Reserve Board Adviser does seem a bit worried. "I don't see the United States existing 2019 with strength," Danielle DiMartino, former Adviser to the President of the Dallas Federal Reserve said. She added, "A year from now I don't see us having a discussion about a continued expansion." "I think by this time next year, we'll be looking in our rear view mirrors," she said. There's a lot baked into that perspective. Oil prices, housing prices, and even investment grade bond prices have already fallen, DiMartino noted. The Brent Crude Oil index is down 17.6% in the past month. "He [Powell] could have leeway with inflation falling back underneath the Fed's 2% target, so that he actually has formal cover to pause," she said. As for housing, it's not just pricing that's falling, but also volumes. And while most are watching the stock market, "Pay attention to credit market volatility," DiMartino said. General Electric investment grade bonds have sold off, as have Proctor & Gamble investment grade bonds, bringing them down to a credit rating much lower than the ratings they were at when the bonds were issued. General electric is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GE? Learn more now.

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