Morning Market Scoop 9 January 2019
In our morning market scoop:
- FED Meeting Minutes
To all the readers and traders, a happy and prosperous 2019 as we kick off our morning scoop with the FOMC Meeting Minutes release.
“Start your Engines”
What’s the scoop? U.S FED (FOMC) Meeting Minutes
With the U.S and international markets starting to show some life after the turmoil we saw over December we eagerly anticipate the FED Meeting Minutes release later tonight at 21:00 SAST.
- The Federal Open Market Committee (FOMC) Meeting Minutes are important to market participants because it offers insights to the FOMC’s outlook and stance on monetary policy moving forward.
The big picture – The interest rates have been the topic of much debate over 2018 and looks to be no different in 2019. As for FED chair Jerome Powell he stated last week Friday that the FED is not on a pre-set path to hike interest rates. He also mentioned that the FED is aware of the downside risk markets are facing. As it stands now the FED might only have one rate hike on the cards for 2019 but that might change depending on whether monetary tightening has been halted.
Some factors to keep an eye on in 2019 are:
JOBS - Looking back at the U.S Non-Farm Payrolls numbers released on the 4th of January coming in much higher than expected at 312K we saw a positive reaction on the markets. The employment numbers will be watched closely to see if the growth we have seen will continue. Along with average hourly earnings and unemployment numbers and the effects it might have on inflation (CPI).
- Our S Non-Farm Payrolls outlook for a beat on the expected number played out well on the Dow as the target price was reached.
US DOLLAR: The greenback gained over 4% in 2018 mostly due to the FED increasing rates four times due to falling unemployment, Inflation (CPI) factors and a stronger domestic economy. With only one rate hike on the cards for 2019 the U.S Dollar will be under pressure. This might be good news for Emerging Economies like ours as the Rand (ZAR) might gain some strength in 2019 against the Dollar (USD).
TRADE: As the effects of the ensuing trade war between the U.S and China start to take effect with Apple Inc revising their sales outlook lower which saw the share price tumble. Apple isn’t the only tech company feeling the brunt as Samsung’s also reported a miss on its quarterly profit. China and the U.S being two of Samsung’s biggest exporting destinations.
- Trade talks resumed on the 7th of January between U.S and Chinese officials to try and come to an agreement that would suite both parties.
TRUMP: Need I say more? President Trump has been very vocal about the FED outlook and interest rate hikes, Trade tariffs and the beloved “Wall” that is currently in his sights as a matter of urgency.
- As long as the tweets come in the markets will act and over react which should be taken note off going forward.
What does all this mean for me?
- Like the saying goes, “if the U.S sneezes the world catches a cold” the US economy is the driving engine of international markets. If we see an economic slowdown in U.S markets, then we can expect that to filter through to the rest of the world.