China Trade Terms, Brexit’s Impact, Global Economy Steady
In today’s Steady Investor, we look at what is going on in the markets and our key takeaways and questions for investors to consider, such as:
- Is the U.S. and China trade agreement realistic?
- What retirement mistakes should you try and avoid in 2020?
- The Brexit is official. Could this lead to a recession for the UK next year?
- The global economy finishes the year on firm footing
- What implications could come from Boeing’s halting production of the 737 MAX?
Are Terms of the U.S. – China Trade Agreement Realistic? The U.S. and China have agreed in principle to terms of a trade agreement, but part of the agreement appears – on the surface – to be wildly farfetched. According to U.S. negotiators, China has committed to agricultural purchases to the tune of at least $40 billion for the next two years, an exorbitant amount by historical standards. Indeed, $40-$50 billion seems far too high relative to China’s agricultural needs and previous years’ purchases. In fact, $40 billion of agricultural purchases would amount to almost double the record for what China has purchased from American farmers in previous years. China has growing demand for soybeans and pork, but the question is whether they will actually meet targets, or if this is yet another case of over-promising and under-delivering.1
9 of the Biggest Financial Mistakes You Should Avoid in 2020!
Looking toward the final days of 2019 and the New Year ahead, many investors may be wondering what to do and how to prepare for what’s to come in 2020.
See what we believe are the biggest mistakes investors make when planning for their financial future and how to avoid them with our guide, “9 Retirement Mistakes to Avoid.”
If you have $500,000 or more to invest and want to learn more, click on the link below:
Learn About the 9 Retirement Mistakes to Avoid!2
Brexit Becomes Official – The U.K. election was nothing short of historic, with the Conservatives (Tories) winning a remarkable 80-seat majority. This victory for the Tories all but solidifies the Brexit mandate, with Britain nearly certain to leave the European Union on January 31. Perhaps the biggest benefit to this vote is not the political outcome, but rather the removal of uncertainty about the fate of Brexit. A second potential benefit is that there seem to be widespread predictions that the U.K. economy is due to suffer badly as a result of this breakup, with some forecasting recession in the coming year. In our view, this narrative actually works in the equity market’s favor, as baseline assumptions of worst-case scenarios often leave wide open the possibility of a positive surprise. If the economic outcome is anything better than recession (even no growth), it could result in a positive response for the markets. On the negative side, British Prime Minister Boris Johnson signaled he would not extend the Brexit transition any further past the end of 2020, which increases the risk that Britain could end up formally leaving the customs union and free trade bloc with no deal in place with the EU.3
Global Economy Finishing the Year on Firm Footing – A handful of positive economic data hit the tape this week, and most all signs point to solid footing for the U.S. and global economy. U.S. business activity rose to a five-month high in December, U.S. purchasing managers struck a positive note about economic activity entering the new year, and consumer spending picked up in November. China also reassured markets this week with industrial output and retail sales figures that showed a pickup in growth, not to mention the limited trade deal that appears to be in the works between it and the U.S. Global growth, on balance, is expected to notch a 3% rate in 2020 – slowing but still nicely positive.4
The Outsized, Little-Known Impact of Boeing’s Problems – Most readers are likely familiar with Boeing’s recent woes as they relate to the 737 MAX plane. Two crashes last year led to a grounding of the planes, which led to ongoing investigations, which have now led the company to temporarily halt production of the plane. Typically, we do not write about individual companies or stocks in this column, as we would rather focus on the macroeconomic news that shapes the economic outlook and global markets. But that’s just the thing – Boeing’s halting production of the 737 MAX could have real implications to U.S. and global GDP. Aircraft production and aerospace is an important part of the U.S. economy, and halting production could lead to job cuts, furloughs, and a hit to the U.S.’s trade deficit if enough planes aren’t delivered. By some estimates, Boeing’s actions could cut 0.5% from U.S. GDP in Q1 2020.5
We can’t predict or control what is in store for
the market or what is to come in 2020, but investors can stay focused on making
sure their own actions help guide their investments to succeed. One way to do
this is not to fall prey to common investing mistakes.
There are common mistakes and habits that we believe can help some investors succeed while others fail. To help you understand some of these mistakes and how to avoid them, we have created the guide, “9 Retirement Mistakes to Avoid.”6
In this guide, we provide our thoughts on what we believe are 9 of the biggest retirement mistakes investors should avoid. If you have $500,000 or more to invest and want to learn more, click on the link below:
2 ZIM may amend or rescind the free guide “9 of the biggest retirement mistakes investors should avoid” for any reason and at ZIM’s discretion
3 The Wall Street Journal, December 17, 2019. https://www.wsj.com/articles/johnson-says-u-k-will-cut-eu-ties-by-end-of-2020-11576592223?mod=hp_lead_pos7
4 The Wall Street Journal, December 16, 2019. https://www.wsj.com/articles/global-economy-steadies-but-europe-remains-a-weak-spot-11576499964
5 The Wall Street Journal, December 15, 2019. https://www.wsj.com/articles/boeing-weighs-cutting-or-halting-737-max-production-11576448990
6 ZIM may amend or rescind the free guide “9 of the biggest retirement mistakes investors should avoid” for any reason and at ZIM’s discretion
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