When Will the Next Recession Come? 2 Factors to Watch

"It would be an absolute disaster if the Fed doesn't cut rates and undermines its credibility. That would cause investors to panic and make for some very interesting tweets," said Wander, referring to possibly more Trump tweets about Powell and the Fed.

Trump has been criticizing both in tweets and speeches in recent weeks and has looked into the possibility of demoting the Fed chairman to his previous position as a Fed governor, according to Bloomberg, but the White House denied the story.

If economic indicators do deteriorate and the Fed doesn't cut rates as expected and there's more negative talk about Powell, then markets will react negatively, said Sonders.

Another negative for financial markets is the inverted yield curve, which is a "solid indicator of a recession 12-18 months later," said Kathy Jones, chief fixed income strategist at Schwab. But she said the inversion in this cycle is unique because it hasn't yet led to a pullback in bank lending. "A recession is coming but not all the indicators are falling in place to say it's imminent," said Jones.

She favors a barbell strategy for bonds, investing in short- and intermediate-term bonds, up to seven years maturity, rather than just short-term bonds, which currently have higher yields. Once the Fed cuts rates, investors will be reinvesting short-term bond proceeds at lower yields, so having longer-term bonds will allow them to lock in higher yields, explained Jones.

Wander agreed. "It may be that true shorter-term bonds offer higher yield with less duration risk, but that strategy will lead you to miss out the appreciation associated with long-term maturities as rates decline.

"In the past 20 years when there was an inverted yield curve, you would have done better investing in longer rather than short-term securities three out of 10 times."

Wander also cautioned against increasing exposure to high-yield bonds.

"We are in a global economic slowdown," said Omar Aguilar, chief investment officer of equities and multi-asset strategies. "Nothing is working except growth, and large-caps are doing well."

He also recommends that U.S. investors increase their allocation to foreign stocks, which is about 15% on average. "The biggest driver to increase international allocation has to be where the dollar been," but a Fed rate cut would devalue the dollar, creating more opportunities for international investing, said Aguilar.

— Check out Why LPL Is Bullish on Stocks on ThinkAdvisor.