Summary for the 11th and 14th of January 2019


Wall Street has slowed down somewhat on this Friday (11th of January) after it has been gaining since the beginning of the year. Earnings season will be starting on Monday(14th of January), and this will mostly likely be determining how the stock market will move onward.

The Chinese stock market ended in the negative on Monday morning due to the released exports/imports numbers year over year that were weaker than the market expected. The exports fell by -4.4% in December, the market was expecting a gain of 3%. Imports fell by -7.6%, the market was expecting a gain of 5%. This is the weakest imports by China since 2016.

The slow in the Chinese exports in December might be due to the fact that most of the exports to the U.S already have been expedited because of fear for the raise in tariffs that were supposed to happen this month. The slow in imports is probably due weaker domestic demand. The Chinese government will try to stop this slow in its economy by market interventions, and this again can affect the Chinese government to soon come to an agreement with the U.S to avoid raising in tariffs.

The Chinese economist and politician, Liu He, will be visiting the U.S this week for a trade talk. This is quite important, since President Trump won't be able to attend the World Economic Forum in Davos this year and won’t have the opportunity to have a trade talk with China. The trade conflict between the U.S and China is on hold until 2nd of March. If the two parties can't come to an agreement, the U.S will raise the tariffs on its imports from China from 10% to 25%.

The U.S’s Consumer Price Index for all items less food and energy rose by 2.2 % year over year in December, the number is around the inflation rate target. The Fed prefers to look at the price index for personal consumption expenditures (PCE) when deciding the monetary policy. The PCE rose to 1.9% in November. The overall inflation rate has declined due to lower energy price. Lower inflation gives a positive effect in the consumer’s buying power.

The UK’s  Industrial Production disappoints in November, declining by -0.4% month over month. The market was expecting a raise by 0.3%. This is the third consecutive months with decline in industrial production, thus showing a downward trend in UK production at the end of 2018. This might be due to lower demand from the EU and the Brexit uncertainty.

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