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Summary

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe. Markets keep on roaring! Trump makes progress on several fronts RBA changes its monetary policy stance China delays coal imports

Content

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Markets keep on roaring!

  • Trump makes progress on several fronts
  • RBA changes its monetary policy stance
  • China delays coal imports

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact us.

The Big Picture

For the second straight month, major stock markets around the world made impressive gains. While some express the opinion that this rate of growth is unsustainable, we are of the opinion that nearly all of these recent gains just take us back to September – before the US Federal Reserve (the “Fed”) chair made comments that sent markets into a tailspin.

Since we have markets once again about fairly priced, we believe that the ASX 200 and the S&P 500 can continue to grow from here – but at a more modest pace – as if the October-February period had never happened.

Of course, Trump’s dealings over trade with China, his “Wall”, and the US government shutdown contributed in part to market volatility. The shutdown is now behind us as Trump compromised on the level of funding – only to lodge an emergency order for the rest.

While there are social issues concerning the Wall, there should be no major economic impact for Australian investors from here over its possible construction or funding.

China has agreed with making some changes on trade with the US. Trump removed the March 1 scheduled uplift in tariffs from 10% to 25%. A meeting between Trump and Xi in Florida is mooted for late March.

It is unlikely that Trump will get all he wants anytime soon but a start will be seen as a win for both sides. There have been issues with intellectual property (IP) and IT for decades so that won’t get sorted quickly. China has agreed to certain policy moves on its currency and increases in agricultural imports from the US.

The US jobs data were again particularly strong but some other data were weaker. There are major statistical issues in trying to interpret a vast array of data on a monthly basis. For example, Retail Sales for December were a major miss on expectations. But the massive retailer, Walmart, blitzed the market with its latest quarterly report released in the same month. Go figure!

The Fed has been very careful in managing expectations in recent times. It has even downplayed its moves on reducing debt levels. It seems unlikely that investors have anything to fear from the Fed in 2019.

The RBA kept rates on hold in Australia but, importantly, acknowledged that the next move in rates is as likely down as up. For two years it has been arguing that “the only way is up”.

To read more please visit https://www.infocus.com.au/news/economic-update-march-2019/