God bless those central bankers and their cheap money!

That’s what some have been saying for many years now since the beginning of quantitative easing policies in the United States and at other central banks around the world.

Those cheap money/central banker policies were discussed on Thursday at a Deutsche Bank Wealth Management conference in Manhattan.

The Federal Reserve will continue to succeed in 2020 and the stock market will continue to prosper, but at a slower rate than in previous years.

That’s the nub of a new report from Deutsche Bank Wealth Management entitled “Outlook 2020: The End of Monetary Magic?”

The report said the “magic” would continue. However, it said the recession risk will slightly rise from its 2019 level.

Last year was a “banner year” for almost all asset classes and central banks “when it comes to asset inflation,” and the central banks are “having the biggest say in the markets,” according to Deepak Puri, chief investment officer for the Americas at Deutsche Bank Wealth Management.

He added that central banks can’t solve all the “structural problems” of economies, but their actions have inspired consumer and investor confidence.

The report’s projections assume that the Federal Reserve will pause on aggressive cutting. “Our thesis is no rate cuts for the next 12 months,” Puri said.

He cautioned that governments over the long term should not over rely on central banks to fix basic economic problems. However, in the short term, markets were prospering last year and should continue to do so in the next year, he said.

Growth rates will slow down in 2020, but the “recession risk in the United States is still limited,” the report said. The risk is based on the possibility of political or trade war problems becoming aggravated.

However, Deutsche Wealth Investment officials said these now seem under control. The report said the composite index of 10 leading indicators all are positive.

The bank also said that the inflation rate would continue to be low at 1.9%. Why does it remain so low despite large federal deficits? “The China effect has had a huge impact on that price of a basket of goods,” according to Puri. Technology development is also keeping inflation at bay.

These multiple factors add up to good numbers over the next year here and in most economies around the world, according to the report. It projects the S&P will rise by about 7.5% this year.

The report predicted the U.S. economy would grow by 1.6% this year compared with 2.2% in 2019. It also projected slightly slower growth rates in China and Japan.

“The key point here is that, even though major regions are slowing down,” Puri said, “no major region will be in recession.”

World global GDP, he added, should grow at about 3.1% in 2020, about the same rate as last year. He said although the biggest economies are slowing down, global growth will be partly fueled “because there are a lot of emerging markets where we expect the growth trajectory to go up.”

And volatility?

Puri said markets could be affected by “politically charged” events. These can include anything from the presidential election to more trade wars with the United States. In the case of the United States and China, a new antagonistic approach, replacing a model of cooperation initiated in the Kissinger era, is going to continue for some time. Puri said that it will be a long-term issue because both major parties are in agreement on taking a tough approach to China trade.