According to predictions, stocks may reach record highs as 2019 draws to a close. However, Wall Street has already begun issuing warnings about the risks and threats to the market brought by the coming year. Torsten Slok, chief economist at the Deutsche Bank has actually sent out a list of 20 risks to their clients to give them a heads up of what to expect for 2020. Here are some of the things on the list.
Increasing Wealth Inequality
Topping the list is the concern over the growing wealth inequality, an issue that has also taken center stage in the conversations revolving around the coming presidential elections in the United States in 2020.
One of the solutions posed by candidates to address this giant issue is the call for additional taxes for the wealthy. Slok is particularly concerned over this issue over others as it can’t be solved in the short term. Other financial experts also expressed worries over who the next person would take the American presidency and that a ‘market correction’ might happen should a certain candidate gets elected.
According to statistics, the wealth gap among United States citizens has continued to grow wider over the decades. In fact, the top 10% earners in the country account for 50% of the total household income figure, which has reached $12.88 trillion in 2016. This phenomenon is attributed to the stagnation of wages while company shares saw rapid gains.
Trade War Uncertainties
Another thing that investors should be wary of is the ongoing trade war between the two economic giants China and the United States. As of the latest, President Donald Trump has yet to agree to roll back tariffs on the Asian country.
It can be remembered that tariffs of more than $500 billion have been slapped on China-made goods while American products have been stuck with $110 billion of duties by the Chinese government.
Slok says that investors should keep an eye on and consider the possibility of changes in consumer spending that might result from the implementation or non-implementation of certain public policies.
Other Issues
The ongoing impeachment inquiry against President Trump and the possibility of a government shutdown are also causes of concern for investors and their interests, according to Slok.
Other financial experts say that the results of the inquiry might affect the stock market in a similar way that President Richard Nixon’s impeachment proceedings in the 1970s led to an 11% fall in the S&P 500. Still, they noted that other factors aside from the proceedings were also at play at the time and affected the market as well.
