Summary for the 15th of May 2019


With only a couple of twitter messages, The US president, Donald Trump has almost managed to reverse Monday’s decline in the stock markets. In the messages, he ensures the financial markets that, when the time is right, US and China will come to an agreement of a trade deal.

The investors in the financial markets know that an escalation of the trade conflict won't be good for any of the two countries, and those two will have to eventually come to an agreement. US’s tax reform and the ongoing expansionary fiscal policy that started about a year ago have been lifting the growth of the US economy, and with an absent in inflation growth, the Fed keeps the interest rate unchanged. When the Chinese government also implements stimulus measures to boost its economy, the stock markets will keep rising.

There is a limit of how much the investors worry about one and only topic, as long as the trade conflict doesn’t escalate even further, and as long as a deal will be made, the investors will eventually move on to worry about other things.

The EU area’s industrial production month over month  for March shows a fall of -0.3% from the previous month, just what the market has been expecting. Germany’s ZEW economic index for May, shows that the future outlook for the manufacturing sector has declined yet again, below what the market has expected. On the other hand, the current outlook has been positive, more than what the market has expected. This shows that the economic activity in Germany and EU area has been improving, the future outlook is still uncertain due to Brexit and the trade conflict.

Indices for 15th of May.
Dow: +0.8% (14th of May)
S&P 500: +0.8% (14th of May)
Nasdaq: +1.1% (14th of May)
Nikkei: +0.2%  (15th of May)
Chinese indices: +1.4% (15th of May)
STOXX Europe 600 Index: +0.46% (15th of May)

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