There is an old saying that ‘when the US sneezes the world catches a cold’. And while we appreciate that US economic growth is forecast to slow from 2.9% in 2018 to around 2% in 2019, 2018 benefited from Donald Trump’s tax reforms – so 2019 was always going to be a slower year. And 2% US economic growth, coupled with continued job creation, certainly doesn’t suggest that the US is sneezing, let alone that a recession is imminent.
In the UK, we have had another week full of Brexit drama which didn’t yield much change.
It is amazing to consider that today (Friday 29 March 2019) was meant to be Brexit Day and yet we still don’t know whether Brexit will actually happen (and if it does, what kind of Brexit it will be). Although Theresa May’s deal was shot down again this afternoon, we may soon have some Brexit clarity – not because MPs all of a sudden get their act together, but because of European elections in May 2019. However, given the majority of MPs are opposed to a no-deal Brexit, the most likely option now, in our opinion, is a further Brexit delay (although as we have said before, that is not the result that companies want – as it simply prolongs the uncertainty that has already hit business investment).
This coming week, we have elections in Ukraine and Turkey; US and eurozone retail sales; Chinese PMI; US employment data (non-farm payrolls; unemployment rate; the participation rate; and average earnings); eurozone unemployment; and eurozone CPI.
Investment Management Team