Last year we had two big unknowns. We didn’t know what the Fed was going to do and we didn’t know what would happen to the trade talks between the U.S. and China. One of those unknowns has seemed to clear up. The Fed appears to be on the sidelines and we’ve seen a good market rally since they’ve stepped back. The China talks appeared to be going well until last week when there was some uncertainty around the Xi Jinping and Trump meeting, which was put off. We saw the market trade down for the first time during the year, so, this week all eyes should be on the preliminary talks that are happening because of the deadline that is coming up.
Preliminary talks are very important right now. There have been talks of a mid-March meeting. We could, potentially, see those U.S. tariffs start to be imposed on Chinese goods if not addressed before the deadline. However, those tariffs could always be delayed as well. The Chinese New Year, Lunar New Year, ended on February 5th of this year which is why we are just now starting to see these things come to fruition. On the vlog last week Ashley talked about the Chinese being weak in terms of growth which is why they need this to stimulate their economy. Last year they had the slowest economic growth in the 28 years. We could start to see some movement over the next couple months. A deal being reached on March 1st is unlikely. If that is the case, you may start to see the U.S. start to delay things. Intellectual property is going to be the focus of this week, so, that will be huge to see how, and if, China will meet us halfway.
Another issue, currently with China, is that their birthrate is dropping. They had the one child policy for so many years, however, even after they have taken that away, the birth rate is still dropping. This type of decrease is important to the markets and money. They’re having tremendous problems with their younger worker set because that population has really fallen. Besides the fact that they have a lot of structural problems in the trade war, they’re having one of the same problems we are in that they trying to find workers. This issue is particularly bad for them though because they’re facing a tough demographic with the birthrate drop.
South Korea Fun Fact
As most people know we keep a lot of troops over in South Korea to help maintain the peace. A fun fact is that we are getting paid by South Korea to provide those troops. That charge went up 8% this year. South Korea will pay the U.S. roughly $920 million dollars this year to keep the peace and maintain our troops over there. It’s positive to hear that we’re doing a good deed, but it never hurts to get paid to do it too.
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