By Alana Sumic in Albert Park 2019 has followed on from 2018, and the predictions and forecasts seem to get gloomier by the day. As soon as it seems there’ll be a little relief the market takes a nose dive. Last week we delivered the news that the global economy will only increase by 2.9%, not the 3% originally forecasted in 2018. This week, the news isn’t any better. And it’s China’s economy that is currently dragging down markets and the Aussie dollar. In December, Chinese exports were down a whopping 4.4%. That’s the country’s biggest fall in close to two years. And it wasn’t any better for their imports, down a massive 7.6%. The lowest since July 2016. Added onto that, the pressure they feel from US President Donald Trump and his administration to work out a favourable trade deal for the US will be the fact that China posted its biggest trade surplus with the biggest economy in the world on record. Ray Attrill, Head of FX Strategy at the National Australia Bank, said ‘The decline in exports is seen to be symptomatic of weaker global demand that transcends the impact of US tariffs, with weaker exports to the Eurozone as well as the US. Weaker imports, meanwhile, are viewed as evidence of an even sharper slowdown in China’s economy’. ..............................Advertisement.............................. | Every country on Earth could be about to pay through the nose for this critical, natural resource… But act quickly and decisively and soaring prices for this mineral could potentially make you a bucket-load in 2019. | | Source: grandcanyontrust.org
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Add to that the slow Apple sales causing the stock to drop, and a risk-averse mentality in equity markets, as the ABC reports, and this caused the European markets to fall into negative territory and unsurprising for 2019 so far, tech stocks were suffering the most. Across the globe, there were market falls in nearly every market. And with the announcement of a slowdown in the Chinese economy, Wall Street closed in the red. The Dow Jones slipped 87 points, or 0.4%. The benchmark S&P 500 fell 0.5%, with only the financial sector not posting a loss. And NASDAQ, which is tech-heavy, fell 0.9%. So what caused the US markets to drop? It was the fall of tech. Apple, Netflix, and Google’s parent company — Alphabet, all fell more than 1.2% each. Back home in Australia, the week also started sluggishly, with the Aussie dollar down against the greenback, pound and euro, sitting at 71.97 US cents, 55.9 British pence and 62.7 euro cents. Craig Birk, chief investment officer at Personal Capital in San Francisco, had this to say about the Chinese economy downturn: ‘It will be a big thing to see if the Chinese slowdown is real, or if it is an excuse for some companies not to hit the high growth seen last quarter… ‘If things are really slowing down, you’ll start to see it show up this quarter in earnings.’ But there could be some good news on the horizon… We are currently in earnings season, and Citigroup reported a more than expected profit. Its shares grew 4.0%, thus bolstering the financial sector of the S&P 500 by 0.7%. But the lofty highs that were predicted in October look to also be down beaten. Instead of the 20.1% corporate growth earnings expected for the S&P 500, they have now been downgraded to 14.3% year-over-year. The markets are experiencing some tough conditions at the moment. And as 2019 progresses, we could potentially see more uncertainty. If you would like to find out potential ways you could protect your wealth should the markets and economy continue their downturn, then check out controversial economist Harry Dent’s Boom & Bust Letter here. This week in Markets & Money In Monday’s Markets & Money, Selva looks at the FAANGS. In recent history, all these tech stocks have boosted stock markets. But now, it looks like they might just be the ones dragging it down. Selva even thinks that FAANG stocks may have peaked. So will the market only rally if FAANG stocks are doing well? To find out more, go here. In Tuesday’s Markets & Money, Selva discusses how markets are turning negative and global growth is slowing. Many even think we’re heading for a recession. But some investors don’t see that happening. Either way, Selva believes you should be prepared for a bear market. Holding cash and gold can be one way to potentially cut risky positions. To find out more, go here. On Wednesday, Selva wrote about the current state of oil prices. Last year, we saw some volatility in oil prices and then a downturn. But as Canada and OPEC cut down on production, and lower exports from Iran and Venezuela could see oil prices rise. Meaning, higher petrol prices when filling up our vehicles. To find out more, go here. In Thursday’s Markets & Money, Selva writes about the current state of the car market. And as Selva explains, other than buying property, purchasing a car could be one of your biggest buys. And now, with trade tensions between the US and China and dwindling global economic growth, car sales are down. And tightening credit and falling house prices has confidence falling. And with consumer sentiment down, car sales could keep falling. To find out more, click here. In Friday’s Markets & Money, Vern talks about investing limits. Vern sees redemption requests becoming the norm when the next recession potentially hits. The markets are relatively calm at the moment. However, as we saw in 2018, volatility can hit at any time, and Vern sees 2018 just the dress rehearsal to what’s to come in the markets. To find out more, go here. Kind regards, Alana Sumic, Editor, Markets & Money Weekend Publisher’s Pick: Don’t Buy a Single Pot Stock until You’ve Read This Book! Sam Volkering has just released an exclusive investing resource called ‘The Black Book of Cannabis’. Inside, you’ll be taken deep under the covers of the most controversial, misunderstood and lucrative investing opportunity of our lifetimes. Download you copy today and learn how to potentially turn a single $5,000 investment into $24,750 within the next 12 months. 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