This week the UK is hosting a general election which will decide who has the majority in the House of Commons there. Boris Johnson called this special election to try and strengthen his majority so that he’d be able to pass a Brexit bill through the house that can then go into the EU. They don’t have much time before the end of the year so they’re trying to speed this through. We think it’s going to have a huge impact on global trade. Not just the trade between the EU and Britain but also the trading with the U.S. Boris Johnson and Trump seem to work well together so if he holds his majority, that could be good going forward for our relations. This impact that we’ve talked about for years is finally coming to a head and the British people are going to get a say in the matter. It’s something that we’re watching because it’ll be coming mid-week, along with several other items. The China trade deal is still looming. The ECB meeting is on Saturday and a lot of news will start trickling out afterward as they, along with the Fed, make decisions. Last week we saw the China trade deal bring the market way down for the first negative week in what feels like months. The market held support at 3080 on the S&P 500. The market held at that and then bounced back, and we saw a big rally on Friday. If negative news comes out this week, it’s not just what the news is but whether or not the market holds that support of 3080. We feel like we’re going to have a strong close to the year and most likely end higher than expected. If it breaks through, we may be a little more cautious, but that 3080 number on the S&P 500 is something we’re watching very closely.
This is the most consequential election for the British since the 1970s. Specifically in 1979 when Margaret Thatcher was elected. It’s not just Brexit that’s a big deal right now, but also that the labor party wants to take up government spending in the UK, like 10%. That would be a record level of their GDP and would impact Britain for generations. The election will be a major one and will put the final pieces of the puzzle together. If you’ve got Great Britain lining up to have Brexit become a reality and at the same time the European economies not doing well, where are Europeans and the people in Great Britain sending their money? The answer is that they are sending it to the U.S. People in Europe must have someplace to put their money and the better choice is the U.S. Other countries have negative rates and slowing economies, so the U.S. has been the one to fill the gap.
As we see Europe, China, North Korea, and all these other countries having issues, we look at the United States and see how well we are doing. Friday was proof of why we’re doing so well. The job number was incredible and is the best we’ve seen since January. The wage growth was the best it’s been since February. It’s not where it was last year at this time but to have this level of job growth, 10 years into an expansion, is unprecedented. When you look at what people are spending because they’re working, it’s also higher. Christmas sales were up 16%. Looking at the days from Thanksgiving to Cyber Monday, it was 16% higher. We’re set up to have a great end of the year. The consumer is spending money which is a key indicator for success across the board.
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