What’s happening: highlights from the NP Investment Team
What is behind the global slowdown and is the worst behind us? At this point last year only one major economy had a PMI below 50 (representing a contraction) but that number has now grown to ten. In most cases, the reasons are mainly domestic, with China experiencing weaker credit growth in response to past policy tightening, Germany being affected by new car emission standards and Brexit weighing on the UK. Importantly, the main headwinds in the two largest economies, the U.S. and China, are starting to fade.
China and the U.S. were last year’s big global headwinds but with Beijing easing and the Federal Reserve dialing back its tightening, signs of a global pick-up are appearing in the markets. China has made 60 easing moves since last June and fiscal stimulus is now on track to exceed 2016’s levels. The president’s hawkish commentary in October raised fears of a U.S. recession but his most recent statements have put those fears to rest for now. The U.S. economy remains healthy, with domestic corporate profits before tax expected to increase by 10% in the first half of this year and unemployment claims hitting their lowest level in 50 years. This is important because it is domestic profits that drive U.S. employment and capital spending.
Leaders and laggards: What’s up and down in the U.S. stock market?
The stock market is experiencing a significant rebound to start the year as concerns about the Federal Reserve overtightening and a slowdown in corporate earnings easing. Following the pullback in the 4th quarter of 2018, stock valuations are more attractive and the Nixon Peabody investment team is initiating new positions in companies that we believe will generate positive returns over the coming years.
Click here for more information about NP’s investment capabilities.
What is behind the global slowdown and is the worst behind us? At this point last year only one major economy had a PMI below 50 (representing a contraction) but that number has now grown to ten. In most cases, the reasons are mainly domestic, with China experiencing weaker credit growth in response to past policy tightening, Germany being affected by new car emission standards and Brexit weighing on the UK. Importantly, the main headwinds in the two largest economies, the U.S. and China, are starting to fade.
China and the U.S. were last year’s big global headwinds but with Beijing easing and the Federal Reserve dialing back its tightening, signs of a global pick-up are appearing in the markets. China has made 60 easing moves since last June and fiscal stimulus is now on track to exceed 2016’s levels. The president’s hawkish commentary in October raised fears of a U.S. recession but his most recent statements have put those fears to rest for now. The U.S. economy remains healthy, with domestic corporate profits before tax expected to increase by 10% in the first half of this year and unemployment claims hitting their lowest level in 50 years. This is important because it is domestic profits that drive U.S. employment and capital spending.
Leaders and laggards: What’s up and down in the U.S. stock market?
|
Economic Sectors |
January through 1/29/19 |
Calendar Year |
|
Energy |
9.55% |
-18.10% |
|
Health Care |
2.49% |
6.47% |
|
Consumer Discretionary |
8.19% |
0.83% |
|
Information Technology |
5.60% |
-0.29% |
|
S&P 500 |
6.06% |
-4.38% |
|
Industrials |
9.95% |
-13.29% |
|
Consumer Staples |
2.70% |
-8.38% |
The stock market is experiencing a significant rebound to start the year as concerns about the Federal Reserve overtightening and a slowdown in corporate earnings easing. Following the pullback in the 4th quarter of 2018, stock valuations are more attractive and the Nixon Peabody investment team is initiating new positions in companies that we believe will generate positive returns over the coming years.
Click here for more information about NP’s investment capabilities.