Summary for the 14th of February 2019


The stock exchange in Madrid, Spain, was one of the few exchanges that ended in negative yesterday. The Spanish parliament rejected the minority Socialist government proposed 2019 drafted budget yesterday and the Spanish Prime Minister Pedro Sanchez is expected to call for a snap election in mid-April.

The US President, Donald Trump, is considering extending the deadline for China tariff increase from 1st of March to 1st of May. Also, the Chinese President, Xi Jinping is expected to be attending the trade meeting with the US Secretary of the Treasury, Steven Mnuchin on Friday. This is a positive signal, because earlier trade talks between the two countries have always been on a lower level.

The US core consumer price (CPI)(excluding food and energy) increased by 2.2%, year over year in January, the same rate as in December, year over year. The market was expecting a 2.1% growth rate. Month over month, the inflation rate growth was 0.2%, the fifth consecutive month with growth. The Fed’s preferred inflation indicator isn’t the CPI, but the core personal consumption expenditures (PCE). The PCE growth rate is usually about 3/10 lower than the CPI. Yesterday CPI rate doesn’t indicate a raise in inflation, but it still gives a higher probability of a rate hike.

China published its trade balance today. The trade surplus fell less than the market expected, due to higher export than expected. Investors were expecting a deeper fall in the trade surplus. The numbers should be viewed in conjunction with Chinese New Year celebrations, which had made the numbers more difficult to be seasonally adjusted. The export to the US was very weak, this was due to a very strong export earlier, before the US original planned of implementing the Chinese tariff.

Japan also published its GDP numbers of the fourth quarter 2018. Japan’s economy was picking up its pace after a fall in the third quarter. The growth came mostly from the domestic demand.

Indices on the 14th of February: The possibility of avoiding another government shutdown, the trade talk between the US and China have led to a positive close in the stock market.

Dow: +0.5% (13th of February )
S&P 500: +0.3% (13th of February)
Nasdaq: +0.1% (13th of February)
Nikkei: +0.1%  (14th of February)
Chinese indices: -0.5% (14th of February)
STOXX Europe 600 Index: -0.32% (14th of February)

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