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Key Themes to Watch after a Dismal 2018

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Jan. 2 2019, Updated 3:35 p.m. ET

What to expect in 2019

US equity markets saw a selling spree in the fourth quarter of 2018. Despite President Trump trying to play Santa by calling the sell-off a buying opportunity, US markets (SPY) had a rough quarter. Looking at the price action in 2018, Facebook (FB) saw a negative price action of 26%. Alphabet (GOOG) and Walmart (WMT) fell 0.80% and 5.7%, respectively. Amazon (AMZN) gained 28% in 2018. In this part, we’ll discuss the key themes to watch in 2019.

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Key themes

  • China’s slowdown and the Chinese government’s efforts to stop the slowdown could be among the key themes to watch in 2019. While the growth slowdown has been almost global in nature, China has looked vulnerable.
  • President Trump’s economic policies, especially on trade relations, could also drive the markets. The temporary trade truce between the US and China will end in the first quarter.
  • The Fed’s policies could also impact the markets in 2019. The Fed’s tightening, at a time when growth rates are cooling off, is seen as a bearish driver for the markets. On multiple occasions, President Trump vented his anger toward the Fed for raising rates.
  • Geopolitics could also drive the markets in 2019 as the Democrats take control of the House. President Trump’s policies could receive more scrutiny in 2019. The 2020 presidential race is also expected to heat up.

Next, we’ll discuss how these themes could play out in 2019.

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