Global markets ignore Brexit, and shutdown
The market continues to behave inversely proportional to the sober logic. Shutdown in America continues, there is already a 33-day work stoppage of the American government. But yesterday was only the first session, during which the S&P500 index closed in the red zone.
As I wrote in my previous reviews, the chance of a new correction in the stock market of America is very high. The fact that more than 800 thousand public sector employees don’t get paid, and can’t service their debt – mortgage, car, loans from banks, education, etc. – powerful premise to first “junction” that will inevitably follow in the form of indicators, fixing the decline in consumer activity, which in turn “pull” myself down and inflation in the country, and as a result, we see a relatively low macroeconomic reports.
A possible positive might be the fact that the background statistics, the fed is unlikely to raise rates, and is likely to delay this process for the second half of 2019.
The irony of the situation is that the additional burden on the economy due to the shutdown is estimated to be worth more than $5 billion, and it is this figure which required a trump for the construction of its wall or fence on the border with Mexico.
All that is happening in the market right now is a farce and self-deception, because in the background, as thousands of people are struggling to make ends meet, were left without salaries, there is a delay of the publication of data that otherwise would confirm that the economy is losing momentum.
Because the asset growth of the us stock market I believe contrary to logic. In addition to the danger of shutdown is also a new danger is brewing – or rather, forgotten old, – China and its confrontation with the United States.
The administration of the trump rejected the offer of China to conduct preparatory trade talks ahead of the visit of Deputy Prime Minister Liu he in the end of the month. This indicates a lack of significant progress in the negotiations, and the US request for the issuance of the financial Director of Huawei only exacerbates the current lack of understanding.
Another illogical tool is the British pound, which ignores all the problems of Brexit. The GBP/USD rate strengthened again and made up 1.30 on the back of strong data on the labor market. The unemployment rate fell from 4.1% to 4%.
It is impossible to determine why the market is not disappointed of what is happening around Brexit, as long as we are not talking about the extension of article 50, and therefore, time to address the issue less, and, as they say, “things are there”.
“International financial center”