Mike’s Morning Brief – January 2, 2019

Mike working on his computer

What’s going on in the world…

Market opens lower to begin 2019. It’s a new year, but a similar theme: Turbulence. Global markets are largely lower in the wake of a weak PMI report out of China. It is showing contraction for the first time in over a year. China has been a major growth engine for global growth. It’s been struggling for months, which is putting pressure elsewhere, particularly in commodity prices. Crude oil opens the new year down sharply again. The timing of this economic report is important as China and the US are locked into talks on trade. A US delegation heads to Beijing next week. In this volatile environment, both nations need a deal. But is a deal doable? Is China willing to cut a deal, which includes ceasing IP theft? Is Trump going to do a deal, just to call it a deal, ahead of the 2020 election? China can be more patient and ride it out longer than the shorter focus time in the US. At least historically. It was just a year ago that the world was experiencing synchronized global growth. Now the synchronization is shrinkage. There’s big change in Washington, as the Democrats take control of the House. Their first order of business is a funding package to reopen the government. The Dollar renewed its strength this morning and interest rates continue to fall with money flowing into the Bond Market. The 10-Yr Treasury yield is down to 2.66%, the lowest level in 12 months. Keep those belts buckled. The volatility has continued.

Have a great morning,

Mike Frazier

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