Summary for the 23rd of January 2019


The S&P 500 fell by -1.4% yesterday. The stock index of European stocks, Stoxx600 fell by -0.4%. Asian stock markets also fell due to the trade conflict between the U.S. and China. A positive surprise is that the Asian stock markets didn’t fall as steep as most feared.

The ILO Unemployment rate in the UK for September-November 2018 comes in as 4%. Down from 4.1% for the June-August 2018. There are 141 000 more people at work, above market’s expectation of 85 000. Claimant for unemployed benefits increased by 20.8 thousand in December 2018, higher than expectation of 20 thousand. The data shows the same development as in 2017 and 2018. The unemployment rate is at the lowest in the UK, it hasn’t been this low since December 1974 to February 1975. This affects the wage growth, the average earnings incl. bonus(3 months) rises by 3.4%. Excluding bonus, the wage growth stays the same as previous three months of 3.3%, but still highest growth in 10 years. With low productivity rate, a high capacity utilization and wage growth can lead to rising prices. The Bank of England will thus need to balance it’s monetary policy in a situation with rising prices and risk of economic downturn due to Brexit.

German’s ZEW Survey rises somewhat in January, but from an already low number. The number for the current economic situation falls sharply. The ZEW Survey is the survey from investors and analysts. The surveys have a high correlation with the stock market in Germany, though it doesn’t predict GDP as well. The rise in January is good news and shows that the market is getting more optimistic.

The Japanese central bank announces that it will keep the interest rate unchanged at -0.1%. It has adjusted inflation prediction for 2019 from 1.4% to 0.9%. The goal of keeping the 10 years treasury bond yield at 0% is also unchanged. The central bank will still maintain an expansive monetary policy until the inflation is at or over 2%.

The U.S cancels trade meeting with two Chinese vice ministers. The reason for the cancelation is said to be due to the disagreements over intellectual property rules. U.S advisors comment that China’s offer to purchase more American products is positive, but not enough to solve the trade conflict. The central themes in the discussion are forced intellectual transfer, patents theft and ownership restrictions on foreigners. These are the areas President Trump has the highest priorities for.  The meeting between the two countries will continue when Liu He, the Chinese economist and politician is visiting the U.S. for trade talk.

Indices on 22nd and 23rd of January.

Dow: -1.2% (22nd)
S&P 500: -1.4%(22nd)
Nasdaq: -1.8% (22nd)
Nikkei: -0.7% (23rd) 



This post is sponsored by my video course in Portfolio Analysis, check it out if you are interested

Quick and Easy Portfolio Analysis Video Course

and Facebook page for other information:

Quick&Easy Finance



Comments

Post a Comment

Popular posts from this blog

Summary for the 2nd of October -Weaker manufacturing outlook

Last week’s flash PMI estimates for the EU area and yesterday’ final PMI numbers are indicating that the weakening in the manufacturing sector isn’t country specific, but rather the weakening is across countries. The decline in Germany’s manufacturing sector is less than expected by the financial markets, while the decline in France is higher than expected. The same goes for Spain and Italy. The UK’s PMI index has increased by 0.9 to 48.3 and is more than expected, though 48.3 still indicates a weaker outlook. The US Manufacturing PMI has increased to 51.1 while the ISM index declines by 1.3 percent to 47.8, the lowest value since 2009. Despite weakening activities in the manufacturing sector for the developed countries, for the developing countries the outlook is still positive. The global PMI value in the manufacturing sector has risen from August to September. Past months’ decline has been due to weaker growth in the global trade. The WTO has updated its global trade forecast
Read more

Summary for the 15th of October

China’s balance of trade shows a fall in exports by 3.2 percent, comparing to a year ago and the imports fall by 8.5 percent, the first fall since May this year. China is the largest contributor to world economic growth, through the weaker imports, China’s economic decline is affecting the rest of the world economy, such as the Euro area. The Euro area’s industrial production for  August has risen by a little more than the markets have expected. The industrial production in the Euro area has been weakening since the start of 2018. Finland is currently holding the council of the EU presidency. At a press conference with the European Council President elect, Charles Michel, the Finnish prime minister, Antti Rinne, says that The EU needs more time to reach a Brexit agreement. Boris Johnson is hoping to seal a Brexit deal before the EU summit on Thursday, so that he will be able to present it to the British Parliament on Saturday for approval, in doing so, he won’t need to postpone B
Read more

Summary for the 21st of October Brexit drama

On Saturday, the British parliament is withholding the final decision of the revised Brexit deal and forcing Boris Johnson to ask the European Council for an extension to the 31 st of January. Instead the parliament has greed on Oliver Letwin’ amendment, which states that there wont be a no deal Brexit until the parliament has agreed on the revised Brexit deal this week. And on Saturday night, Boris Johnson has sent an unsigned letter to the European Council asking for a Brexit delay as well as a personal letter to the Council asking the EU leaders not to delay Brexit. The US stock exchange has closed in negative on Friday after Johnson & Johnson has to recall 33 000 bottles of baby powder in the US after health regulators found trace amounts of asbestos in a bottle purchased online. Boeing has admitted that two of its employers in 2016 misled the FAA about the 737 Max and its technical system. Weaker than expected Chinese economic indicators also contributes to the negative
Read more