We’re even on this prediction so far. Surprisingly, health care stocks have been held back by political concerns over possible regulations, while utilities have done well since all interest-rate sensitive areas of the market have outperformed as yields have been falling.3 To date, a basket of our favored sectors and less-favored are actually both up 17.5%.3

 

Prediction 8: The annual federal budget deficit approaches $1 trillion, a level unprecedented absent a recession.​

Tax cuts have added to the deficit, and neither political party is showing any interest in reining in federal spending. As of the latest projections in May, the forecast from the Congressional Budget Office for the 2019 fiscal year deficit was closing in on $900 billion, a staggering amount for a country not in recession.

 

Prediction 9: U.S. and global politics spark more market volatility as the cold wars within the U.S. and with China persist.​

Overall market volatility has been rising this year. Although trade issues have been dominating the headlines, other issues such as U.S./Iran tensions and growing political and social discord within the U.S. have also been causing concerns. Judging how these issues might influence economies and financial markets is complicated, but they are unlikely to be positive.​