Is there a slowdown in 2019

1 Sept  2019

Dear Fellow Investor,

What a difference a week makes in the life of a market.

 

Weekly chart of the Dow Jones .

The Dow was up 774 points from last Friday’s close. The 50 week moving average supported the price as professionals bought the dip.

Asian markets including the SGX, KLSE and Hang Seng also held long term chart support in the face of recession talk, yield curve fears, trade war uncertainty and Hong Kong riots. Last week the Hang Seng PE was at 10.4 and the SGX at 12 which are near 2008 lows. Value players are beginning to commit. There are great companies which will continue to be great now trading at attractive levels.  

Behind this scary background is the Western media such as BBC, CNBC, CNN who constantly beat the recession drum.  Even I Capital, a local market research service are hoping for a US recession so Donald Trump will lose in 2020.  Does the media and I Capital. really want millions of people to lose their jobs, their businesses and homes ? Do they want us to earn less money ? That does not sound compassionate to me.,

The majority of Western media  has downplayed the facts. The US economy has seen some of the best jobs and income data in half a century:

Facts from Stephen Moore of the Wall St Journal

·  US has the lowest unemployment rate since the 1960s.

·  US has have the lowest unemployment rate for women, blacks, Hispanics, and those without a high school diploma since 1969.

·  US has the lowest inflation rate in 50 years.

·  US has the lowest interest rates in most people's lifetimes. The 30-year mortgage rate in many markets is down to 3.5%. When Jimmy Carter was president, rates for mortgages hit 20%.

·  The wealth of American families and businesses recently reached $100 trillion for the first time ever. As more than half of all families own stock, this wealth burst affects nearly everyone.

·  Wage growth for workers is at or near a 20-year high, and recent revisions by the Labor Department show fatter paychecks in 2017 and 2018 than previously thought.

·  Today in America, there are 7.5 million unfilled jobs. This is the highest level of job openings in American history.

·  Trump has been ridiculed for calling this economy a "blockbuster," but he's mostly right.

Is there a slowdown in 2019? Undeniably, yes. Growth has slowed in the last year from 3%-plus to just barely 2% this year. The slowdown is reflected in weak manufacturing and industrial production in 2019 and a troubling drop-off in business capital spending. Consumers are spending – thanks to the tax cuts and wage gains – but that can only take the economy so far.

Sustainable growth depends on business formation and expansion, not consumer shopping. We know what's holding that back: the trade war with China, a Fed that's too tight, and the headwinds of an economic stall-out in Germany, the rest of the European Union and Japan.

Most countries in the world would love to have America's economic conditions. My forecast that if and when Trump gets a deal with Beijing that ends the tariff wars, the economy will soar and the recession boosters will look mighty foolish – again.

This will lead world markets higher.

Invest well and grow your wealth,
Bill

 

Critter of the week is Elsa a white tigress just recently acquired by the Melaka Zoo in Ayer Keroh. We plan to celebrate Merdeka  day in Melaka by  visiting  Elsa.