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A Global Slowdown Seems Definite but Markets Have Other Worries

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Aug. 18 2020, Updated 9:33 a.m. ET

Global slowdown

Today, the Bank of Japan maintained its monetary policy but sounded less optimistic on the economy, stating that “exports and output have been affected by slowing overseas growth.” Also, Chinese Premier Li Keqiang has stated that “it is true that China’s economy has encountered new, downward pressure.”

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US economy

After disappointing US (SPY) housing data, manufacturing activity has amplified slowdown fears. And this month, the European Central Bank lowered its 2019 growth forecast to 1.1%, with president Mario Draghi seeing “sizable moderation in economic expansion that will extend into the current year.”

Meanwhile, markets found a way to live with the growth downgrades and repriced themselves last year. However, markets are still worried about the slowdown worsening.

Other worries

Brexit chaos and a breakdown in US-China trade talks are other risks for markets (EEM). Today, markets have been supported by positive comments on US-China trade. However, it may be imprudent to call the situation a done deal, especially given Donald Trump’s tendency to walk out of meetings not yielding his desired results.

As of 11:30 AM Eastern Time, Apple (AAPL), NVIDIA (NVDA), Advanced Micro Devices (AMD), Micron (MU), Baidu (BIDU), and Microsoft (MSFT) had risen 1.4%, 3.0%, 2.8%, 2.2%, 1.7%, and 2.1%, respectively. However, General Electric (GE) and Facebook (FB) had fallen 3.4% and 2.8%, and Qualcomm (QCOM) and Alibaba (BABA) were flat.

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