Markets

(Beijing)

Markets are taking bad news out of China hard. New data out of Beijing shows that the country’s exports dropped sharply in December. The figures suggest a global slowdown, and a brutal trade war with the US are taking their toll on the Chinese economy. Exports fell a whopping 4.4%. China also held a $323 bn trade surplus with the US, the largest since 2006. Imports fell 7.6%, showing how much the slowdown in China was affecting demand. Car sales in in the country also declined for the first time since 1990.


FINSUM: The tariffs are working, but there is a larger issue at stake—the US and the world’s relationship to China. There is a lot of strain being put on the country, and we are concerned about how the government there will react.

(Washington)

The Fed is facing a herculean task, argues the Wall Street Journal. That task is to keep inflation at its target, while also steering a moderation in growth. In other words, how does the Fed keep inflation in check without causing a recession? One way to consider this challenge is to think about how the Fed may approach it: “focus more on the domestic economy and keep nudging interest rates higher to combat inflationary concerns, or pay greater attention to stresses abroad and in the markets, and hold rates steady or even nudge them lower”, says the WSJ.


FINSUM: We think this is not as hard as rumored. Our view is that the Fed should freeze rate hikes and broadcast that a long-term freeze is the plan. That should put the economy (and markets) on solid footing, and keep things from getting too out of hand.

(Beijing)

Happy new year—the Dow opened down 350 points this morning on fears over a Chinese slowdown. New data is out of the country which shows that Beijing’s manufacturing sector is contracting, a sign that tariffs may be flowing through to the economy. That makes markets hope more than ever for a trade agreement between the US and Beijing, which would likely alleviate the economic strain. The S&P 500 has fallen 20.2% on an intraday basis, an official bear market.


FINSUM: The implications of a big Chinese slowdown are serious. Firstly, how does the country react politically to what they likely view (or will project) as a US-imposed slowdown? Secondly, how much does the slowdown drag down the global economy?

Page 1 of 203

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…