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Retailers are vying to be the Net-a-Porter, Goop and Sephora of CBD, seeing the cannabis-derived product as the next big thing in luxury beauty. One obstacle: CBD is still not entirely legal.

NEW YORK, United States — At Miss Grass, wellness junkies can stock up on $150 facial serum infused with cannibidiol (CBD), $55 hemp and sage honey and a rose gold CBD vape pen. None of these products will get you high, but they are definitely high end.

The market for luxury products made from the non-psychoactive parts of the marijuana plant is exploding. Inserting full spectrum CBD or cannabis sativa seed soil into everything from chocolate to moisturisers has gone from a taboo to the mainstream as dozens of US states remove prohibitions on pot. The products themselves have migrated from head shops to the beauty counter at Barneys New York almost as quickly.

Miss Grass, White Label CBD Market and Fleur Marché, which launches next week, are competing to be the Sephora, Goop and Net-a-Porter of cannabis. Plenty of traditional retailers, from Sephora to Neiman Marcus, are joining the green rush as well. They offer an increasingly vast mix of serums, tinctures, edibles and other products, with an emphasis on beauty and wellness that plays on CBD’s purported anti-inflammatory and anxiety-relief abilities.

“No one even understood what it was, and now it’s three letters on everyone’s tongue,” Cindy Capobianco, president and co-founder of Lord Jones, a line of ingestible and topical CBD-infused products. “We see cannabis as a revolution, we don’t see this as a trend or a hot ingredient.”

CBD is a chemical compound extracted from cannabis. Studies have shown that it may act as an anti-inflammatory and could address a host of skin concerns, though research on its effect on humans is in its infancy.

The federal government still considers CBD a controlled substance, along with tetrahydrocannabinol (THC), the cannabis compound that gives marijuana its high. However, the farm bill passed by the Senate earlier this week would legalize hemp-based CBD, and dozens of states have lowered or eliminated restrictions on cannabis use.

The rapid march to full legalisation sparked the recent gold rush, as mainstream retailers grew confident they could sell CBD products. The Brightfield Group, a cannabis market research firm, estimated that the US hemp-based CBD market will hit $22 billion by 2020, up from $591 million today, with beauty making up 7 percent, or $1.6 billion, of the total.

Lord Jones became one of the first CBD brands to launch on Sephora.com in October and last week, Neiman Marcus introduced eight CBD brands in its “trending beauty” shops in five locations including Sagely Naturals, Cannuka, Cannabliss Organics and Ildi Pekar. In November, Lab to Beauty launched exclusively at Barneys New York, making it the first CBD-based beauty line sold at the retailer.

Mainstream adoption by leading department and specialty stores signals a shift in consumer perception about cannibidiols, with more people aware of the distinction between CBD and psychoactive THC. Wrapping CBD in luxury trappings helps make that line even clearer.

Capobianco said it was critical for packaging to be “exceptional” in order to convey that Lord Jones was an “elevated” CBD line. These labels are targeting luxury retailers like Sephora and Neiman Marcus rather than the granola, mom-and-pop shops once synonymous with cannabis culture.

Luxury is core to Beboe, founded by Clement Kwan, a former Dolce & Gabbana and Yoox executive. The company recently added a CBD-only vaporiser alongside its rose-gold THC range, and is exploring adding beauty and wellness products, Kwan said.

“Whatever we build, next to whatever product is out there … does the quality hold up next to something non-cannabis or CBD related?” he said.

Davey Napoli, co-founder of White Label CBD Market, which launched Tuesday, said his “Goop of CBD” sells product for people “who aren’t necessarily cannabis users as you would classically define that consumer.” Of the approximately 50 brands that will be sold on the site by February, 75 percent are beauty and wellness-themed, including Lord Jones and Allay, a line of CBD-infused body butters.

Fleur Marché, a multi-brand CBD retailer co-founded by Goop alums, launches in beta next week. Meredith Schroeder and Ashley Lewis headed up Goop’s fashion and wellness verticals, respectively, before turning their attention to “reposition cannabis as a wellness tool,” said Lewis. They want to create a retail vibe more akin to a high-end beauty store that focuses on CBD’s wellness benefits than a smoke shop where people go to get high.

All of these products and retailers are launching even as CBD remains in a legal gray area.

The $867 billion farm bill includes language that would legalise hemp, a cannabis plant with less than 0.3 percent of THC, the legal limit. If passed by the House and signed by President Donald Trump, CBD derived from hemp would be legal to grow and sell nationwide. However, the bill doesn’t specify if CBD made in a lab or extracted from the marijuana plant or yeast would also be legal. The Drug Enforcement Administration in September moved CBD from Schedule 1 – a category that includes heroin and LSD – to Schedule 5, alongside prescription cough syrup and other low-risk, but still heavily regulated drugs. Many banks and online payment services don’t accept CBD transactions.

In order for Barneys New York to sell CBD products, for example, brands have to disclose who grew their hemp, which also has to be tested to ensure it has less than a 0.3 percent concentration of THC to guarantee the product will be used for its anti-inflammatory – rather than psychoactive – effects.

“The extra steps [retailers] need to be taking in order to legally sell CBD shows that they’re investing in this … for a Sephora or a Neiman Marcus, that’s a huge lift,” said Verena von Pfetten, co-founder of Gossamer, a cannabis lifestyle magazine.

Similar to other newly trendy beauty categories, including “natural” and “clean” products, there are few regulations covering what CBD products contain – other than THC – or how they’re marketed. Items containing the full spectrum of cannabinoids found in the hemp plant are marketed almost identically to those formulated with pure cannabidiol, or even products derived from cannabis sativa seed oil, which contains no CBD.

“We found some products that vaguely said [they contain] CBD but in the end really didn’t have that ingredient,” said Jennifer Miles, senior vice president and divisional merchandise manager for cosmetics at Barneys New York. “We’re really looking at every brand and every ingredient. ”

In addition to Lab to Beauty, the retailer plans to sell Vertly, a range of lip balm, lotion and bath salts made with hemp-derived full-spectrum CBD. Miles said Barneys is in talks with three or four other brands.

The lack of clarity is one reason most CBD players are small upstarts or independent lines that have built entire brands based on the ingredient. Some mainstream beauty labels, including Milk Makeup and Origins, have begun to play in the space by adding a product or two made with some part of the cannabis or hemp plants like cannabis sativa seed oil. Neither Milk Makeup's Kush Mascara or Origins' Hello, Calm Relaxing & Hydrating Face Mask contain any CBD.

Some CBD sellers put their ingredients front and center, much like conventional beauty and skincare brands. Lord Jones’ $60 High CBD Formula Body Lotion contains 200 milligrams of full spectrum CBD. Bottles have 100 measured pumps that each contain 2 mg of the ingredient and each ingestible is a specific dose too.

Dr. Jeff Chen, founder and director of the UCLA Cannabis Research Initiative, said the distinction between cannabis-derived products is irrelevant until the effect of CBD on humans is proven. Studies have shown CBD reduces swelling in the paws of mice and inhibited the growth of bacteria in a controlled lab environment. A few studies are underway to test CBD’s use on human skin, but even if they show results, more research will be needed, Chen said.

“Even if it did work, what is the dosage? Is it 5 mg, is it 500 mg? How much do you actually need?” he said. “The good news is there’s minimal to no downside, and the legal risk is pretty much zero now.”

CBD entrepreneurs aren’t waiting for the scientific community to weigh in.

David Chung, chief executive at Farmacy, a “farm to skin” brand sold at Sephora, is applying for a state license to grow hemp and cannabis plants on a 140-acre farm in Catskill, New York. Farmacy plans to launch four CBD products at Sephora starting in the spring with Better Daze Ahead, a $48 moisturiser.

Chung said he’s been plotting his entry into the CBD market for over three years.

“In China, our acupuncturists and herbal medicine people have been using CBD for years, it’s just that in the US it’s been underground,” he said. “It’s been sleeping. I wanted to invest money in this and get it to the mainstream.”

OXFORDSHIRE, United Kingdom — Controversial British political marketing firm Cambridge Analytica weaponised fashion brands to help elect Donald Trump president of the United States, revealed Christopher Wylie, the whistle-blower who earlier this year lifted the lid on the company’s misuse of data belonging to 87 million Facebook users, adding to public distrust of the world’s largest social network.

Speaking at VOICES, BoF’s annual gathering for big thinkers, in partnership with QIC Global Real Estate, Wylie presented publicly, for the first time, evidence that Cambridge Analytica — a vendor to the Trump and Brexit campaigns — used preferences for fashion labels expressed on social media platforms including Facebook as a primary input to building the algorithms that targeted people with pro-Trump messaging during the run up to the 2016 US presidential election, repurposing technology originally designed for cyber warfare to influence politics.

Affinity for certain fashion labels is a strong signal of susceptibility to populist political messaging, explained Wylie. He revealed a matrix illustrating correlations between several fashion brands — including Nike, Armani and Louis Vuitton — and five psychological and personality traits (openness, conscientiousness, extraversion, agreeableness and neuroticism) that were used by Cambridge Analytica to target political messaging. Those who liked American heritage brands Wrangler and LL Bean were low on openness, more conventional and more likely to respond to messaging supporting the election of Trump, for example. A preference for European designer label Kenzo, on the other hand, reflected the opposite.

The approach was a new “weapon of mass destruction,” said Wylie, who first joined SCL Group, the precursor to Cambridge Analytica, when it was a military contractor for the Pentagon, the UK’s Ministry of Defence and NATO, developing cultural weapons to fight extremism and other ideological threats, and became its research director.

Wylie, a data mastermind who worked for Trump campaign strategist Steve Bannon, a client of Cambridge Analytica, said the weapons the firm developed, like traditional munitions, were composed of payloads (narratives) and targeting systems (algorithms) but the battleground was virtual, and they were being deployed against ordinary citizens, not military assets.

“We were about to destroy the world together. I became Icarus and put on wax wings and flew into the sun,” said Wylie, recalling the unholy pact he forged with Bannon. “The difference between Facebook and the NSA is simple but profound,” he added. “The NSA’s targets are extremists, foreign spies… on Facebook you are the target.”

Careful study of fashion informed a significant amount of research at Cambridge Analytica, said Wylie, who recounted how consulting psychologists encouraged researchers at the firm to ask more questions on aesthetic and stylistic preferences for clothing as they were found to be strong signifiers of traits that were used as a primary means to identify people who were susceptible to joining the populist right. “Fashion data was used to help Bannon build the alt right,” said Wylie.

The link between fashion, psychology and politics makes sense. Fashion isn’t simply the business of selling clothing. It’s the business of selling identity. It’s about providing tools to help people answer fundamental human questions like: ‘Who am I?’ and ‘How do I fit into the social hierarchy?’ Ultimately, it’s about differentiation (self-expression) and flocking (social expression); it’s about being an individual while also participating in tribes and common trends.

In short, fashion is rooted in the cultural substrate from which political preference flows, especially at a time when political strategists and other operators have shifted the crux of the debate towards identity politics, birthing the so-called culture wars.

Andrew Breitbart — the late populist who founded Breitbart News, a platform once run by Bannon that was instrumental in electing Donald Trump — is best remembered for these words: “Politics is downstream from culture.” Wylie’s revelations suggest that it’s also downstream from fashion, which sits at the very heart of cultural identity and affiliation.

Wylie noted that many populist political groups throughout history quickly established uniforms or looks to cement their rise, citing China’s Maoists and the Nazi Party in Germany. More recently, the alt right white supremacists who marched on Charlottesville adopted the white polo shirt, long affiliated with skinheads, as a uniform, something that Cambridge Analytica studied.

But if fashion preferences can be mined to influence political thinking, can fashion brands use their own messaging to reprogram the cultural signals they send and drive political change?

Wylie suggested that fashion brands could play a powerful role in shaping and not just signalling political leanings, charging companies with a responsibility to act. This means a label such as Wrangler — whose brand identity is rooted in the masculine, self-reliant mythology of the American frontier — could hack its own marketing to steer politics in another direction.

“We need cultural defence and we all make and define these cultural narratives,” said Wylie, to a standing ovation. “We depend on you to not only make our culture but protect our culture. It is up to you if Trump or Brexit become the Crocs or the Chanel of our political age.”

The underlying danger is the unchecked power of technology companies mining our personal data, said Wylie. “Silicon Valley sees the internet as terra nova,” he explained, likening tech giants such as Facebook to conquerors. “These companies are not our saviours, they are seeking to colonise us,” he said. “Facebook is the new East India company of the internet.”

Personalised targeting is creating a large-scale surveillance machine and re-segregating society under the guise of community, he continued. “We are creating informational ghettos, we are cognitively segregating our society. We have the slave trade and the sex trade…. We are now at precipice of creating the data trade.”

After the sound and fury of 2018, emerging markets’ place in the global economy has not changed much. They are growing twice as fast as developed countries. Economic management is solid in most places, with inflation near historic lows and sovereign debt burdens lighter than in the U.S., Europe, or Japan.

Except that the assets are considerably cheaper. The Vanguard FTSE Emerging Markets exchange-traded fund (ticker: VWO) has dropped more than 15% year to date. Spreads for sovereign emerging market Eurobonds over U.S. Treasuries have climbed by 140 basis points (1.4 percentage points) to about 400. Those numbers are flashing a buy signal at some investors. “After the stampede toward ‘more safety,’ we’re seeing a greater proportion of attractive shares in emerging markets,” says Ben Preston, portfolio manager at Orbis Investments

While fund managers expect continued U.S.-China trade tensions next year, a stronger headwind for emerging markets may well dissipate: a rising dollar pushed by above-trend U.S. growth and anticipated interest-rate hikes. The greenback has been flat since late October, muffling the great sucking sound it exerted on investments elsewhere. “The dollar plateauing is just fine for our asset class. If it weakens, that’s a bonus,” says Eric Baurmeister, co-head of emerging markets debt at Morgan Stanley Investment Management.

Equity investors have traditionally gone to emerging markets for growth stocks, and seem to be doubling down on that approach after this year’s selloff. Alex Umansky, who manages the Baron Global Advantage fund (BGAIX), is buying internet flagships across the globe— Alibaba (BABA) and Tencent Holdings (700.Hong Kong) in China, PagSeguro (PAGS) and MercadoLibre (MELI) in Latin America—and Indian banks like HDFC (HDB) and Kotak Mahindra (KMB.India), which he sees on the cusp of a mortgage-finance boom. “I have absolutely no insight into trade or tariffs policy,” he says. “I do have insight into cloud computing, digital payments, and the penetration of smartphones.”

Another fan of HDFC is Brian Lloyd, a portfolio manager for international equity at Harding Loevner. “We look to own the highest-quality banks in each emerging market,” he says. “They can get stronger in times of stress by gaining market share.” But his top emerging markets holding is insurance company AIA (1299.Hong Kong). It combines a seasoned management team with a burgeoning home market across East Asia, in Lloyd’s view.

Orbis digs deeper into online China to own games provider NetEase (NTES) and car-buying platform Autohome (ATHM). An against-the-grain pick is Brazilian iron-mining giant Vale (VALE), whose high-quality ore gives it competitive advantage in commodities, Preston says.

Brazil is generally in favor among “top-down” investors who allocate based on country analysis—the largest emerging market with a shot at positive political change under controversial President-elect Jair Bolsonaro. Stocks are up 25% since Bolsonaro began to look like a winner in mid-September, but could rise further if he delivers on a promise to rein in the country’s runaway pension expenditures, says Nicholas Field, global emerging markets equity strategist at Schroders. “Things may not look very straightforward, but I do feel the key task will get done sometime next year,” he says.

The caveat attached to all emerging markets investments is that rewards may be delayed by upheaval beyond their borders. But chaos in Washington, London, or Paris can also make emerging markets look good by comparison. “The world has become more uniform in providing bad news,” says Ricardo Adrogue, head of emerging market debt at Barings. “But in emerging markets, that’s more in the price already.”

It could be worth your while to shop for stocks in London, Paris, and Frankfurt during 2019.

While Europe’s top three economies didn’t prove much of a bargain for investors in 2018, their problems—ranging from Brexit to restive local populations—are likely to dissipate. The stocks are inexpensive, and central bank monetary policies will remain supportive.

“We are getting closer to investors finding Europe attractive,” says Kristina Hooper, chief global market strategist at Invesco. “We can’t ignore the power of monetary policy to provide stabilization in the face of other issues.”

So far this year the leading indexes in Germany, the United Kingdom, and France have underperformed the S&P 500. Since January Germany’s DAX shed more than 16%, Britain’s FTSE 100 lost 11%, and the French CAC gave up 8%. Those figures compare poorly with the S&P 500 that’s dropped less than 2%. All figures exclude dividends and the effects of currency movements.

The stocks were already inexpensive compared to the U.S., but now they are even cheaper. Stock markets in Germany, France, and the U.K. were recently trading at forward price/earnings multiples of around 12, versus close to 16 for the U.S., according to recent reports from Yardeni Research.

Hooper notes that low-interest rates in Europe should help support stock prices. Yields on 10-year government bonds in the U.K. are a mere 1.3% while those in France and Germany are 0.7% and 0.26%, respectively. A 10-year U.S. Treasury-note yielded 2.9% on Thursday.

Both the Federal Reserve and the European Central Bank are debating whether or how far to raise the cost of borrowing. However, given the relative strength of the U.S. economy compared to Europe’s it should be clear that the Fed will raise rates faster unless something dramatic changes.

The pall cast over the markets by political noise is perhaps unwarranted. “Certainly, there are some headwinds,” Hooper says. “Many are political in nature and so won’t have as big an impact, and often they don’t impact the economy.”

Investors wanting broad exposure should try the Horizons DAX Germany exchange-traded fund (ticker: DAX), which tracks the German DAX, iShares MSCI United Kingdom  ETF (EWU), and the iShares MSCI FranceETF (EWQ), which follow the MSCI U.K. and France indexes.

Alternatively, consider individual stocks. Try German company Rheinmetall (RHM.Germany), which has defense and automotive divisions, says Tom Banks, portfolio manager at Federated Investors. Increases in defense spending by governments across the European Union should boost the stock, he says.

He also likes French hotel chain Accor (AC.France) The stock has high-end brands such as Raffles and should benefit as travelers shop for notable experiences. He points out that Accor’s business is increasingly in franchising or managing hotels rather than owning them. That helps keep earnings more consistent and provides better cash flow, Banks says.

He also favors B&M European Value Retail (BME.U.K) which runs more than 500 discount stores in the U.K. and Germany. “There was a stigma about shopping at discount stores but now people doing more of it,” he says.

There are risks. Interest rates could jump and make stocks less attractive. “Europe’s 10-year [bond] rate is a full two percentage points below fair value, based on current economic conditions,” says Jack Ablin, a founder and chief investment officer of Cresset Wealth Advisors. The political dramas across those countries could intensify and spook investors again.

Investors will soon bid good riddance to 2018, a stressful year marked by two stock market corrections, rising interest rates, an ugly trade battle, and growing fears that a bear market lies just around the corner.

Yet as U.S. stocks stumble toward what could be their first yearly loss since 2015, next year is looking rather sunny. So say the 10 market strategists Barron’s consulted this month, all of whom have 2019 targets for the S&P 500 index that are higher than the benchmark’s recent price level of 2600. Based on the group’s mean prediction, the S&P 500 will end next year at 2975, indicating a gain of more than 14%.

The strategists, who mostly hail from investment banks and asset-management firms, offered up individual S&P targets ranging from 2750 to 3100. The stock market is down almost 3% this year, as measured by the S&P 500—a disappointing showing in any year, but especially so after last year’s nearly 20% gain.

To some degree, 2017’s rally discounted this year’s robust profit growth, likely to total over 20%. Could 2018’s downdraft signal next year’s earnings moderation? Our prognosticators expect S&P 500 profits to rise just 5% to 6% in 2019, to $172 per share, partly because companies will be losing the boost from this year’s reduction in federal taxes.

Industry analysts, who typically have loftier forecasts than “top-down” strategists, anticipate per share profit growth of 9% next year.

The strategists are guardedly optimistic that the U.S. and China will reach some sort of trade deal early in 2019, ending nearly a year of friction that has weighed on stocks. Corporations and share prices also could benefit from healthy consumer demand and decent capital investment.

The market’s tumult this year has left stocks trading at about 15 times the next 12 months’ expected earnings, in line with the long-term average. That’s well below the S&P 500’s price/earnings ratio of more than 18 on Sept. 20, when the index hit an all-time high of 2930.75.

Rising interest rates get some of the blame for trimming stocks’ valuation; the Federal Reserve has raised the federal-funds rate—the overnight interbank lending rate—three times in 2018, most recently in September, to a range of 2% to 2.25%. The Fed is expected to hike rates again on Wednesday, to 2.25%-2.50%. Concerns about multiple rate increases thereafter have receded, however, since Fed Chairman Jerome Powell signaled recently that rates are “just below” the neutral rate that doesn’t influence economic activity.

More market volatility could ensue next year as the U.S. and China resume arm-wrestling over tariffs. Investors are increasingly anxious about a potential recession and bear market, as well, given that the current U.S. expansion and bull market are already a decade old.

And say goodbye to “TINA”—the view that “there is no alternative” to stocks. Other asset classes, including bonds, commodities, and gold, also have performed poorly this year. For the first time in a while, cash appears to be a viable competitor, as short-term U.S. Treasuries yield about 2.4%, compared with a 2% yield on the S&P 500. Treasury yields are likely to rise further if the Fed continues to hike rates.

This year has been unusual in many ways. “You had a bear market in the P/E multiple, but a bull market in earnings,” says Ed Yardeni, president of Yardeni Research, one of four strategists with an S&P 500 index target of 3100. The U.S. economy also grew nicely, he notes, with gross domestic product climbing 4.2% in the second quarter and 3.5% in the third.

Our market oracles got one important thing right about 2018 when we consulted them a year ago: They predicted that the federal-funds rate would end the year around 2.25%. They also got a few things wrong. For example, they expected the S&P 500 to rise 7% this year. That now seems highly unlikely, although stocks were up nearly 10% for the year at the market’s September high. Nor did the strategists anticipate renewed volatility or any correction in the index, defined as a drop of 10% from the high. Overall, they predicted that financial stocks would do well in 2018 and that utilities would underperform, but the opposite has happened.

One big surprise this year has been that Treasury yields have remained relatively low. (Bond yields move inversely to prices.) The 10-year Treasury yielded 2.4% at the end of last year. It yields 2.9% now, although it spiked above 3.2% in November. The decline since then reflects concerns about an economic slowdown and surprisingly soft inflation numbers. Our forecasters expect 10-year Treasuries to yield 3.1% next year.

The strategists look for U.S. GDP growth of 2.5% in 2019. While that’s below recent quarters’ level, it’s above the rate in 2016 and 2017.

Stephen Auth, chief investment officer for equities at Federated Investors, predicts that the economy will expand by an annualized 2.5%. “Think of it as a slowdown on the Garden State Parkway, not a crack-up,” he says.

Auth, who has a 2019 S&P 500 target of 3100, has been bullish on stocks for many years. He believes that a number of headwinds will dissipate in 2019, and that the U.S. trade spat with China will be resolved in the first quarter. He also maintains that oil prices probably have found a floor around $50 a barrel. There should be more certainty about the Fed’s dovish interest-rate path, as well. All of these developments will allow the economy’s underlying strength to emerge in the second half, he adds, and S&P 500 earnings will reach $170, up from an estimated $162.32 this year.

Tobias Levkovich, chief U.S. equity strategist at Citigroup’s Citi Research, cites other reasons for stocks to rebound. Industrial activity will be rising, he says, and consumers are generally flush, given low unemployment and wage increases. Sentiment readings and Treasury yields are also favorable, according to Levkovich, who has a 3100 target for the S&P 500.

Some strategists, including Rob Sharps, head of investments at T. Rowe Price Group , and Mike Wilson, chief U.S. equity strategist at Morgan Stanley, are less sanguine about the market’s prospects and the economy.

Sharps, whose 2019 target is 2850, describes a “middling environment with meaningful challenges” for stocks, as U.S. growth moderates. Sustainable economic gains above recent levels depend on productivity improvements, he says. Governments around the world have a lot of debt, and demographics in Europe and China could pose difficulties for growth, he adds.

Wilson’s base-case S&P 500 target of 2750 is the strategist group’s lowest. He forecasts just 3% to 4% growth in corporate earnings for 2019, with an “elevated risk of an outright earnings recession”—two quarters of negative comparisons for S&P 500 profits. He notes that more than half of this year’s profit gain owes to tax cuts and stock buybacks, which reduce share count and boost earnings per share.

The economy might undergo a modest cyclical correction in 2019, but “what if companies react and start firing people?” he asks. In other words, investors could be underestimating the potential severity of the economic deceleration.

The Federal Reserve has played a starring role in this year’s stock market drama by pushing up the federal-funds rate, which influences other interest rates. The fed-funds rate bottomed near zero after the financial crisis, as the U.S. central bank flooded the financial system with money. But the Fed has been reversing course gradually since December 2015, and initially was expected to raise rates up to four times next year.

Many of our experts and others, however, now see just one or two increases in 2019—an acknowledgment that economic growth might be slowing, and that inflation isn’t much of a threat. If the fed-funds rate rises further—probably to 3% or so—that would boost short-term Treasury yields and help make cash an even more attractive investment option.

Powell’s comment that interest rates are approaching neutral, which signaled a coming end to increases, sent stock prices sharply higher for several weeks this fall, but the market has since given back most of those gains.

Saira Malik, head of global equities at Nuveen, the investment unit of TIAA, sees tariffs and higher rates restraining the economy. “The Fed could go too far,” she says, and overshoot the neutral rate by tightening monetary policy too much. Malik’s 2019 S&P target is 2840.

Excessive tightening, via higher interest rates, would squeeze corporate profit margins and the economy, she warns. If investors sense a recession is coming, the market’s P/E multiple could shrink to less than 15, Malik adds.

David Kostin, chief U.S. equity strategist at Goldman Sachs, has a base-case forecast for the S&P 500 of 3000 in 2019. His downside estimate, with a 30% probability, is 2500, roughly 4% below the market’s recent level. The downside could materialize, he says, if investors grow increasingly concerned about a recession in 2020. In that case, earnings estimates could be slashed, and the P/E could contract to 14.

Savita Subramanian, head of equity and quantitative strategy at Bank of America Merrill Lynch, has a 2900 target for the S&P. She urges investors not to overlook the potential attraction of cash, which yielded next to nothing for much of the past decade.

Cash yields today are higher than dividend yields for about 60% of the companies in the S&P 500. “You will get close to 3% at some point for cash, with zero volatility,” says Kostin, another fan.

What could go wrong for the bull market—and market forecasters? Perhaps the biggest near-term risk is a potential breakdown in trade talks between the U.S. and China. Failure to reach an agreement on trade probably would mean that the Trump administration would move ahead with raising tariffs to 25% from 10% on $200 billion of Chinese goods.

If no deal is reached, “it could be a big challenge and an intractable issue for the market,” says John Praveen, portfolio manager at QMA, a unit of PGIM, the asset-management business of Prudential Financial . Praveen has a 2019 S&P 500 target of 3000.

The bigger issue is China’s theft of intellectual-property rights. “If you are a big U.S. tech company working in China, you might have to give away technology, or it’s stolen,” Praveen says.

The past week saw a “de-escalation” of trade and interest-rate concerns, notes Dubravko Lakos-Bujas, J.P. Morgan’s chief U.S. equity strategist, whose 2019 market target is 3100. Talk of a trade war “was becoming increasingly risky for the Trump administration,” he says, noting the market’s negative response to rising trade friction.

If the economic cycle remains intact, Lakos-Bujas thinks that stocks will be rerated higher. He estimates that S&P 500 companies will earn $178 next year. Applying a multiple of 17.4 gets him to a target price of 3100.

Like many other strategists, J.P. Morgan’s resident seer favors technology stocks. The sector has corrected after a strong first half of the year, and the space no longer is “crowded.” The median forward P/E for tech outfits is about 16.7.

Among technology issues, Federated’s Auth is a fan of semiconductor chip maker Applied Materials (ticker: AMAT), whose price fallen almost 50% from its high. The stock looks as if is already pricing in a recession, he says.

Auth also likes the outlook for Caterpillar (CAT), whose shares have lost about 20% this year. Cat has a strong balance sheet, and orders are still holding up, he notes, even if the market is pricing in a “cliff drop” on trade concerns.

Utility stocks fetch 19 times expected earnings, although the sector offers much less growth than tech. Still, utilities are favored by several strategists, including Sharps of T. Rowe Price, and Wilson of Morgan Stanley. Both like NextEra (NEE), which has a good rate base in Florida and a rapidly growing national renewable-energy business.

Consumer-discretionary stocks are least liked by our crowd. Consumers could pull back on spending, due to concerns over tariffs and the impact of a slower housing market, Nuveen’s Malik observes. Within the sector, bricks-and-mortar-oriented retailers face an ongoing challenge, and will have to continue spending heavily to compete online.

Malik likes stocks that have “their own levers” for growth and don’t depend heavily on the broader economy. PayPal Holdings (PYPL) is a good example, she says, because it’s a global player entrenched in the payments business, much like Visa (V) and Mastercard (MA). E-commerce is growing 10% a year in the U.S. and 20% in the rest of the world, a structural tailwind for PayPal, she says.

There were many highs and lows in 2018, but short of a miraculous rally in the year’s remaining 10 trading sessions, the stock market’s returns this year could resemble a lump of coal. The clock starts afresh on Jan. 1, however. If just a few things go right, 2019 could be a happier year.

The designer is selling his mid-century modern home in the city for $17.5 million

Is Hedi Slimane’s love affair with Los Angeles petering out?

The French designer, who became artistic, creative and image director of Celine at the beginning of the year, has quietly put his gated mid-century steel and glass house in the exclusive Trousdale Estates neighborhood on the market for $17.5 million, having owned it for close to a decade.

While he may simply be switching up his L.A. living situation, the sale will no doubt raise some eyebrows, especially after he indicated in an interview with French newspaper Le Figaro earlier this year that the city fails to fill him with the inspiration that it once did.

“I arrived in California in 2008, and I was already very attracted to Los Angeles, where I frequently went since the end of the 1990s. I would start all my Dior collections there, in my hotel room. The city was still asleep, so it was the perfect time to fill in a blank page. There was no creative or artistic stimulation yet, nor was there an emergence of a strong music scene,” he said. “[Los Angeles] has changed today. It’s been taken over and the authenticity is slowly getting lost because the megalopolis appeals to the world and the youth. Los Angeles is an open-air construction site and its mythical places are disappearing day by day.”

It is understood Celine has facilities in L.A., and a prototype studio and atelier in Paris, where Slimane has been spending a great deal of time this year.

A spokeswoman for Celine declined to comment.

According to the listing, the five-bedroom, six-bathroom house, which set him back a little over $4 million, was designed by British architect Rex Lottery in the Sixties and has been extensively remodeled by Slimane. The renovation yielded a living room with high ceilings, a gourmet chef’s kitchen, a large dining room, an office/media room, and a plush master suite.

The grounds boast a large swimming pool, reflecting ponds, areas for entertaining and many palm trees (some linked with hammocks), according to the listing by agent Kurt Rappaport of Westside Estate Agency.

Slimane isn’t the only fashion designer with a penchant for midcentury modern properties in L.A. In 2016, Tom Ford paid $38.75 million for the late Betsy Bloomingdale’s Holmby Hills home in an off-market deal.

The listing of Slimane’s house was first reported by WWD’s sister publication Variety.

The French firm cited difficulty sourcing skins that match its ethical standards.

NEW YORK — No more croco for Coco.

On the eve of its pre-fall Metiers d’Art show here at the Met, Chanel said Monday it would “no longer use exotic skins in our future creations.”

“The future of high-end products will come from the know-how of what our atelier is able to do,” Bruno Pavlovsky, president of Chanel fashion and president of Chanel SAS, said in an interview, hinting that some examples of such craftsmanship would be paraded in the show, which showcases the capabilities of the specialty couture ateliers Chanel owns.

The exotic skins in question include crocodile, lizard, snake and stingray. Pavlovsky noted the list also includes fur, of which Chanel uses very little.

Pavlovsky explained that it was becoming increasingly difficult to source skins that met the house’s quality and ethical standards, and that it would focus its research and development on textiles and leathers generated by “agri-food” industries.

Chanel already utilizes tweeds that are not really tweeds at all, but complicated embroideries that are difficult to copy.

The executive noted that it would take some time for existing products in exotic skins to work their way out of its boutique distribution. He declined to pinpoint the value of Chanel’s exotic skin business.

Chanel’s couturier Karl Lagerfeld said he couldn’t remember doing fur at Chanel, while the founder Gabrielle Chanel might have possessed a panther coat and a sable top. “You look at old collections, there was not much fur,” he recalled.

As for exotic skins, “there is a problem of supply and that was not Chanel’s business anyway,” he said. “We did it because it’s in the air, but it’s not an air people imposed to us. It’s a free choice.”