The first year of the new decade begins with markets in a much more exuberant mood than at the beginning of 2019. Some of the world’s most important stock markets reached record highs in the last month of 2019 — but do investors feel that markets have peaked?
When he finishes negotiating his “deal” with China, US President Donald Trump will probably try to take credit for the country’s shrinking current account surplus with the rest of the world.
However, the fact that China’s exports are slowing is not a new phenomenon, and it is not necessarily a reason to celebrate.
The fourth quarter of the year started with heightened volatility and rising uncertainty and is likely to continue this way, despite some green shoots in the first part of October.
Uncertainty about the outcome of the Brexit negotiations has hit new highs, President Trump seems determined to scare the markets witless with his threats of escalating the trade war, debt problems in China are accelerating – the perfect background for a contrarian ‘buy’ signal.
Just as it was beginning to look like the bond market’s luck was finally running out, President Trump made some remarks that all but guarantee that the bond rally will go on for a little while longer.
While all eyes are on Italy, the world’s second-largest economy is showing signs of trouble. China, this curious mix of communism and capitalism, is running out of steam – and ideas. Unless the Chinese government finds new ways to stimulate its economy, it might find itself facing the world’s biggest revolution.
As the US stocks bull market is now officially the longest after World War II, fears are increasing that the end is nigh for the bulls. However, the approach of the US mid-term elections in November might mean not just that the bull market could continue, but also the end of the emerging markets rout.
The headline may be a bad pun, but the warning is serious. Many people believe that the trouble with Turkey’s currency is confined to that country, but that is far from the case. Turkey is just the first country that implemented populist policies when the going was good to now pay for these policies. The markets are about to teach populists a lesson, and Turkey is the first instalment.
This past week, there has been a frenzy of selling of emerging markets assets. The outflows from both stocks and debt in emerging markets reached their highest level since December 2016.
This amounted to $3.7 billion withdrawn from emerging market equities and bonds, according to data analysed by Bank of America Merrill Lynch. These outflows have helped push our old friend, the Bull/Bear indicator developed by BofA Merrill Lynch, to 4.8 — its lowest level since January 2017.
It’s hard to find a more bullish start to a year than this one. There were “blockbuster” inflows of capital into stocks, as well as corporate and emerging markets bonds, according to the latest analysis by Bank of America Merrill Lynch.