As we kickoff today’s trading, here is an important look at the US government shutdown, home buyers struggling, trouble brewing in Europe, and the beef with China and tariffs.
To Brexit Or Not To Brexit
January 17 (King World News) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: Outside of the question of what the UK government and Parliament does next, the key is what the EU does and to what extent they bend. As after all we are in the 21st century with smart phones, Bloomberg news had this headline: “EU says Juncker is texting with Theresa May.”
As it now looks like Parliament will be heavily involved in constructing a deal that is palatable to both them and the May government, I believe the odds of a no deal/hard Brexit shrinks even more and therefore I’m even more positive on the British pound. While little changed today, the pound is at a 2 month high today vs the dollar and euro…
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US Government Shutdown
Now that the US government shutdown is having a broader impact on government contractors than initially believed, the WH has shifted its GDP forecast to a one-tenth hit for every one week of closure vs their previous estimate of one-tenth for every two weeks. The pressure is only intensifying on both sides over this meaningless amount of money.
Home Buyers Struggling
For years in the post housing crash recovery we know the first time home buyer has only made up about 30% of purchases vs the historical rate around 40%. While there is no question younger people are starting households and getting married later in life than they did historically, student debt is also a major inhibiting factor.
Trouble Brewing In Europe Even With Emergency Policies In Place
…The final print of the December CPI for the Eurozone was left unchanged from the initial one. The headline rate rose 1.6% y/o/y while the core pace was up by 1% y/o/y. With the drop in energy prices, the headline gain was the slowest since April. The core rate increase is pretty much where it’s been for the past 5 years which is the true definition of price stability. The average core rise since 2013 (the ECB went down the rat hole of NIRP in 2014 and massive QE began in earnest in early 2015) is up .9% y/o/y. So now the ECB is left with still emergency levels of policy in place at the same time growth is slowing where the biggest economy in the Eurozone, Germany, saw growth of just 1.5% in 2018. The ECB has become the BOJ.
Finally, The Beef With China And Tariffs
With respect to our beef with China, I’ll continue to argue that going after tech theft via the legal avenue is a much better approach than using tariffs which impact just about everyone with US businesses and consumers paying for it. Thus, the Huawei news yesterday accusing them of IP theft via a court system is the way to go.
…One more article to read in the paper today discusses how tariffs and quota’s in one place ripples thru the rest of the world. Thus, any analysis on quantifying the impact of tariffs is more than just adding up the dollar amount of the tax and dividing by GDP.
KWN has released the powerful KWN audio interview with Dr. Stephen Leeb and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
ALSO RELEASED: Top Analyst Just Warned Investors To Fade Rally As Stock Market Set To Tumble CLICK HERE TO READ.
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