Macroeconomic Analysis

Today, China released its official December manufacturing PMI. The PMI was 50.2 for December. The analysts polled by Reuters expected the PMI to be 50.1.

Global stock markets added $17 trillion in value this year. A year back, most economists saw dismal stock market returns in 2019.

I wouldn’t call 2019 a sea of tranquility for Bitcoin. But at least it wasn’t as much of a roller-coaster ride as the two preceding years.

Strategists at Goldman Sachs (GS) project Netflix (NFLX), T-Mobile (TMUS), and Coca-Cola (KO) to be among the best stock picks for 2020.

Although phase one of the China trade deal won’t end the US-China trade war, it will help restore market sentiments. The trade war is almost two years old.

The Dow Jones Index (DIA) fell 0.6% last week but is still trading near its all-time highs. This week, we have several potentially market-moving events.

Berkshire Hathaway’s huge cash pile might stay in place for a while. Warren Buffett was outbid by Apollo Global Management in his efforts to buy Tech Data.

In today’s Get Real market newsletter, we took a closer look at a potential Tesla takeover and at Trump’s part in US steel. Plus, a rebound for Boeing. 

After declining in June, consumer confidence rebounded in July to its highest level yet in 2019.

The negative interest policy of the central banks is casting government bonds as a futile choice for investors compared to stocks and gold. As a result, bond prices dipped and yields started rising.

Apple Music (AAPL) competes with Spotify (SPOT) and Amazon Music (AMZN). However, Spotify is a runaway leader in the music streaming space.

Widening spreads indicate a slowing economy. Since companies are more likely to default in a slowing economy, credit risk related to their bonds rises.

The rise in delinquencies on student loans in the United States (SPY) (IWM) (QQQ) can be partially attributed to the accelerated rise in college tuition and fees.

The Dow Jones Industrial Average and the S&P 500 have opened higher today. October’s non-farm payroll data came out, shattering expectations.

The US GDP increased at an impressive rate of 1.9% for the third quarter. The growth beat the expectations of around 1.6% for the quarter.

Ron Baron, the CEO of Baron Funds, expects to see the Dow Jones at 650,000 in the next 50 years. He predicted a similar Dow level of 500,000 last November.

Dow Jones Futures are pointing to a flat opening for the day. The flash PMI data and other economic data releases might impact markets today.

On October 10, in an interview with CNBC, Mike Wilson said investors should focus on the fundamental story. He’s worried about expensive growth stocks.

China continued buying gold for the tenth consecutive month in September. The country also continued its de-dollarization bid.

Unofficial job numbers showed a slowdown in job creation. This hit the stock market hard. The S&P500 dropped 1.8% yesterday while Dow Jones fell 1.9%.

Today, the Consumer Confidence Index data fell sharply to 125.1 in September from August’s 134.2. The reading was below the expected 133.5.

Gundlach thinks that we’ve already seen a bottom in interest rates for 2019. US Treasury yields have been hitting lows in 2019.

Data released today show a worsening slowdown in China. The country’s industrial production increased by 4.4% year-over-year last month.

In March, President Trump imposed a 10% tariff on US aluminum imports apparently to protect US aluminum producers from imports.

In addition to China’s passenger vehicle sales, its sales of NEVs (new energy vehicle) also fell for the second straight month in August.

The currency can be weakened by the central bank or government intervention. If President Trump is reelected, a currency war seems obvious.

In August, JPMorgan Chase (JPM) and Bank of America Merrill Lynch (BAC) suggested that investors not buy just yet. Their opinions are now changing.

You’ve likely heard about it in the financial press recently: this ominous, notorious thing called the “yield curve inversion.”

Despite the trade war and the inverted yield curve, the S&P 500 Index is down 1.8% this month. Its resiliency reflects the US consumer sector’s strength.

The US Dollar Index, which measures the strength of the dollar against a basket of other currencies, has risen 2.2% in the past month.

The stock market has seen big moves both ways this week. The S&P 500 (SPY) has surged 1.3% today as bond yields have risen.

The United States and China are in a trade war that has started to impact individual companies, consumers, and the global economy.

On multiple occasions, Trump has said the US economy is doing phenomenally well, calling it “the greatest economy in the HISTORY of America.”

Although the US doesn’t export much crude oil to China, the additional supply of cheap Iranian oil could pressure both Brent and WTI crude prices.

President Trump’s economic advisor, Larry Kudlow, said in an interview with CNBC today that the Chinese economy is “crumbling.”

On Tuesday, in-person US-China trade talks resumed in Shanghai. The two sides have been talking on the phone since the truce last month.

Morgan Stanley doesn’t believe the S&P 500’s current breakout above 3,000 will last. It also doesn’t expect Fed rate cuts to rekindle growth.

As we face a market downturn, market veteran Ray Dalio has valuable advice.

On Tuesday, Virgin Galactic and investment company Social Capital Hedosophia announced that they would merge in an $800 million deal.

On Tuesday, US and Chinese officials resumed trade talks over the phone days after they announced a trade truce.