President Trump Stated He Would Not Meet With Chinese President Xi Before March 1 Trade Deadline… The president has vowed to increase tariffs on Chinese goods if no trade deal is reached by the deadline.
What it means – U.S. markets took the news hard, falling after the president’s comments, and European equities followed suit on Friday.
Business leaders are frustrated and would like for the two sides to reach a compromise quickly instead of pursuing the brinkmanship of taking negotiations to the final hours. The trade war will weigh heavily on the markets as we get closer to March 1.
November Factory Orders Dipped 0.6%… New orders for core capital goods, a stand-in for business investment, fell 0.6% as well after gaining 0.5% in October.
What it means – This report is close to meaningless since it reflects information from three months ago, but we’re still catching up from the government shutdown.
Still, we can see in the numbers that the U.S. economy was losing speed last fall. We might see a rebound in the December numbers, but the continued trade war and slower GDP growth here at home should weigh on factory orders.
Government Economic Releases to Trickle In Over February… The Bureau of Economic Analysis and other government departments laid out a schedule for releasing government data delayed by the shutdown.
What it means – The initial estimate of fourth-quarter GDP was due out at the end of January, but the shutdown put that on ice. Now the government tells us that it won’t release the numbers until February 28, which is when the second estimate is due. The trade report due on February 5 will show up on March 6, and durable goods orders for December, typically reported in January, will be released on Feb. 21, while housing numbers for December will be reported on Feb. 28.
Don’t bother keeping track. We’ll get a swirl of data, much of it two months old, over the next three weeks, and should be back to normal by March 1. That is, if we don’t get another government shutdown.
European Union Lowers 2019 GDP Growth Expectation from 1.9% to 1.3%… The European Commission lowered both the expected GDP growth rate and the expected inflation rate.
What it means – The European Commission had expected the economic bloc to expand by the same rate this year as it did last year, but now it has changed its tune. Reflecting slower growth in the three biggest economies of Germany, France, and Italy, growth across the region will barely break above 1% this year. Germany is struggling with weaker exports and slower growth at home, while France is battling the yellow vest movement. Italy is, well, Italy, and could post GDP growth of a mere 0.2% this year.
None of this will be good news for the ECB, which ended its bond-buying program in 2018 and had expected to eventually raise interest rates from negative 0.4%. The latest growth estimates for the Eurozone could mean that the ECB has to reverse course and restart the bond-buying program.
European Council President Says “There Is a Special Place in Hell” For Those Who Supported Brexit Without a Plan… The Council’s President, Donald Tusk, made the remarks when he told British Prime Minister Theresa May that the EU would not offer new terms for Brexit.
What it means – Brexit is becoming more urgent as the end of March deadline looms large on the calendar. British Parliament rejected the terms May had negotiated with the EU, but the lawmakers haven’t offered an alternative.
As the deadline approaches, businesses are making plans for a hard Brexit, which would immediately affect trade, capital flows, and immigration. It is possible lawmakers will opt to suspend their adoption of Article 50, which would essentially stall the process, but hardline Brexit backers would fight such a move.
Venezuela National Assembly President Moves Closer to Controlling the Country… Juan Guaido has garnered support from several nations, including the U.S., as the legitimate President of Venezuela, displacing strongman Nicolas Maduro.
What it means – It looks like it’s just a matter of time before military and police defections from Maduro’s camp are enough to tip the scales in favor of Guaido. International observers and the local opposition declared the latest election a fraud, which meant that Maduro’s official term ended on January 10. Per the constitution, without an elected leader the President of the Assembly becomes the interim leader until elections can be held.
Needless to say, Maduro isn’t going without a fight, and so far the guys with guns are on his side. But the U.S. has cut off his oil money, and other nations are pressing him to hit the road. The only question is whether or not the country will experience widespread violence in the power struggle.
With inflation expected to run north of 1,000,000% this year, the starving people of Venezuela have very little to lose.
San Francisco Supervisor Aaron Peskin Proposes Banning Facial Recognition… The member of the Board of Supervisors wants the city to avoid the technology.
What it means – Peskin noted, “I have yet to be persuaded that there is any beneficial use of this technology that outweighs the potential for government actors to use it for coercive and oppressive ends.” His proposal includes language that would dramatically curtail the ability of city agencies to procure other surveillance equipment as well.
With the technology world moving us toward a 1984-style dystopia at light speed, this is a proposal from California that many will find attractive.
Data supplied by Dent Research/Delray Beach Publishing
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