Warnings of Possible Economic Slowdown Loom
The threat of an economic slowdown seems to be real, with more signs emerging. Business-friendly moves by policymakers are sorely missed.
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The Stock Market Is Becoming the Favorite Hunting Ground
The stock market is now seen as a viable investing option thanks to zero commission trading and other such features now available at these brokers. Even people who aren’t much aware of the economy and the markets are taking advice from analysts and portfolio managers to make the right trading moves. The fact that you can trade online makes it easier.
But in stock trading you need to be prepared for unpredictability. That’s the only constant in an arena where internal and external factors exert considerable influence. It isn’t always good news so you need to keep your portfolio diversified to balance risk.
But Is an Economic Slowdown Imminent?
There is an indication of impending slowdown in the US economy, according to this Reuters article. Last month was when US manufacturers experienced slowdown in the broadest sense in over a decade. It isn’t hard to see why, since there were trade tensions with China and overall uncertainty, not to mention Fed rate hikes and the doubts surrounding them as well as the sinking equity prices. There was a slump of 5.2 points in the purchasing managers’ index of the Institute for Supply Management in December 2018 from November 2018, and as the chart from this report from Reuters shows, it was the largest fall in a month since October 2008.
New orders sunk by 11 points and just crossed the 50-point threshold which separates the expanding activity from contraction. That, according to the article, is a suggestion of the momentum loss extending to early 2019. Another observation is that most US equity indices have been experiencing lower trending for many months. It is a suggestion that investors must have been anxious regarding the earnings outlook. But as per the survey of the purchasing managers, there continues to be strong expansion. However, the decline in the overall results of this Reuters survey seems to indicate that what the equity markets are conveying is true.
US Economy Not Immune to Slowdown
What’s significant here is that US economy had appeared to be immune to growth slowdown as was seen in most of the major economies since mid-2018. But that conception has taken a beating, after this momentum loss at the end of 2018 revealed that broader global trends can cast their influence on the US economy.
The Reuters article also suggests that the US slowdown is quite similar to what other indicators suggest – major deceleration in trade flows and global export orders. Since October 2018 we’ve also been seeing calendar spreads and oil prices dropping. Traders expect consumption growth to weaken in 2019.
Will Policymakers Plot More Business-Friendly Moves?
The article states that the blame needs to be shouldered by policymakers who really haven’t been thankful for the earlier expansion of the global economy and instead sent it close to a pathetic slowdown by issuing sanctions, tariffs, etc. The threat of recession is looming. This Reuters article is genuine in saying that at least a slowdown isn’t unlikely at all, if the countries’ policymakers continue with their present approach. Let’s hope the worst doesn’t come.
Is a more business-friendly approach likely by these policymakers? We need to wait and see. Take advantage of the ebbs and flows of the markets with a broker that provides cutting edge technology. TradeZero combines its platform and routing technology with the $0 commission model.
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