*Prior commentary is available upon request*

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Positive foundation / backdrop

  • Strong job market

    • Historically low unemployment

  • Low corporate tax structure

  • Rising U.S. oil production

    • Larger safety net for country if politics interrupt oil imports from countries like Saudi Arabia

    • Increased revenues for domestic energy companies

  • Interest rates

    • A shift in Fed thinking

    • Fed released statement forecasting patience in their approach to interest rate hikes in 2019

Macroeconomic Market Report

VIX Index

  • Earnings season

    • Many companies missing analysts forecasts for Q4 earnings

      • Many of those companies citing slowdown of growth / demand in China as cause

  • Chinese economic slowdown

    • China is experiencing a period of transformation, and the economic slowdown has been expected for years

      • The labor cost has risen significantly so companies are moving traditional labor-intensive manufacturing jobs to countries such as Bangladesh, Vietnam, and Myanmar. Chinese business owners are now experimenting with robot manufacturing and high-tech manufacturing (i.e. chips). Since manufacturing has been a huge driver of the economy, it is a factor of slowing down

  • Apple specific

    • iPhones are no longer as popular as they used to be in China. People used to buy it for its great software/hardware and its symbolism on status (they are even more expensive in China than the U.S.). But now Chinese companies make phones that are as good as iPhones regarding daily use and sell them at significantly lower prices

    • Apple has become a victim of the trade war. It is the most recognizable American brand in China, so people started boycotting the brand and its products

    • The smartphone market in China has grown pretty saturated - hardware sales growth will be minimum

  • Trade tensions

    • Uncertainty of trade tensions with China.

      • Xi Jinping and Trump agreed to a 90-day trade truce at a dinner after the G-20 summit in Argentina on Dec. 1st

      • Trade talks currently taking place

    • Brexit uncertainty

      • British economy waiting to see the terms of Brexit

    • Uncertainty in North American Trade

      • Democrats in the US House of Representatives want changes to the revised NAFTA deal known as USMCA, before they are willing to approve the new trade deal

  • Partial government shutdown which lasted over 30 days

    • 800,000 federal employees on unpaid leave or forced to work without pay

      • SEC affected, all SEC employees on unpaid leave

      • IPO’s, etc. not able to take place until SEC is back in operation

  • VIX Index

    • This chart shows market volatility as measured by the VIX index

      • You can see volatility was low (abnormally low) in 2017 and in the second half of 2018 volatility spiked to normal or even a little higher than normal volatility, which rattled investors Possible Chinese Economic Slowdown

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Unemployment Rate

Unemployment Rate