*Prior commentary is available upon request*

steijn-leijzer-702480-unsplash.jpg

Positive foundation / backdrop

  • Strong job market

    • Automatic Data Processing’s national employment report

      • The private sector added 271,000 jobs in December, trouncing the 178,000 that economists predicted

    • Historically low unemployment

    • Income growth YOY above 3% in 2018

  • Low corporate tax structure

    • More globally competitive

  • 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

Macroeconomic Market Report

Volatility Drivers

  • Interest Rates

    • Belief by market strategists that the Fed needs to “pause” interest rate hikes and that combined with the $50 Billion a month that they are shrinking the balance sheet is causing too much tightening in a period of market volatility and uncertainty.

  • Possible 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

  • Political & Trade Uncertainty

    • 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

    • Partial Government shutdown right before the holiday season

      • SEC effected, all SEC employees on unpaid leave

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

Vix Index

Vix Index

Unemployment Rate

Unemployment Rate