Central Banks
We can see the European Central Bank step in with some stimulus. So, the Brexit is not going well. That’s really having a negative impact on the European economies. Therefore, we could see the European Central Bank take action there. Also, we expect the U.S. and China trade talks to work itself out. U.S. trade representative’s or in China this week will hopefully get some good news there, but China’s hurting, worst consumer spending in 20 years. Their GDP is down significantly. It’s down so much that we could possibly see China’s Central Bank taking take some action in order to boost their economy. We expect our Fed to kind of hit the brakes. Central banks around the world are stimulating their economies and it could be counter-productive for tightening like they did last year. We believe they will slow down compared to last year. We anticipate IPOs (Initial Public Offerings) to be active again given the volatility of last year. We expect energy prices to stabilize along with a supply cut. Then, hopefully, central banks will kind of boost the economy.
Global Economy
The previous topic could serve sort of a silver lining of a weak global economy and is maybe the reason the U.S. tried to get ahead of the game on raising. If you look at the U.S. economy rate should be higher. Looking at the U.S economy, there should be inflation. However, there’s not, how’s that possible? How can we see a +3% percent growth GDP rate in the year and oil prices and copper price fall? It’s because we’re importing deflation, in a sense. China’s economy is really hurting, well, we import a lot in China. So even though there are tariffs there, their prices are dropping. We import a lot from Europe as well. A lot of the global demand including Japan, China, and Europe is falling so that keeps prices down. So as an economy we can grow with no inflation. It’s kind of a “goldie locks” economy right now, not too hot not too cold, and that keeps the Fed on the sidelines. The Fed can’t raise rates to stop inflation that’s not there. They also can’t tighten with the rest of the world is weakening rates. This was at the end of the year when they had their blinders on and had a plan to tighten no matter what. It makes you wonder, with no inflation, what’s the fight?
Trade Talks
As we discussed on a previous vlog, one of the reasons that we believe the trade talks will go well with the Chinese is that our economy is much larger than they are and very balanced. Our economy is a lot like a football team with a good throwing and running game. Most of their economy, 33% to be exact, is export-led manufacturing. That’s getting crushed in the trade war. Our economy is much more of a balance of domestic services and manufacturing. We can take the lick much more than they can they are they really getting crushed in that manufacturing sector.
Job Growth & Manufacturing
One thing that’s been consistent in our economy during the last year is job growth. In the month of December, 312,000 jobs were added and crushed the expectation of 176,000. Manufacturing jobs had the largest annual rise in job growth, year over year) for the last 20 years. We’re seeing a lot of manufacturing job growth in the last two years has been north of 470,000 total. As opposed to the eight years before that it dropped 210,000. We all kind of anecdotally thought manufacturing was gone in the United States. Nothing is farther from the truth and those numbers prove it. We’re starting to see job growth across the board internationally as well such as China.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®, AIF®
Senior Vice President
Wealth Consultant
Email Bobby Norman here
Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here
Trey Booth, CFA®, AIF®
Senior Vice President
Wealth Consultant
Email Trey Booth here
Adam Vansant
Associate Vice President
Wealth Consultant
Email Adam Vansant here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
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