What investors 2019 must pay attention to

The soon ending in 2018 has brought investors ' joy. Many asset classes will finish the year at a Minus of various equity and bond markets to commodities such as Oil. The Worst is through, however, We present six risks, the expected loads in the next year on the mood and the courses.

1. The slowdown in the economy

the Outlook for The global economy have deteriorated over the last few months. This is, among other things, early indicators such as the purchasing managers ' indices (PMI) reading: Listed on the economic performance of the countries weighted global PMI to the beginning of the year 54.4, it has fallen by the end of November to 52.

early indicators of economic activity

image to enlarge

Although the United States currently, positive. The strength of the American domestic economy, however, is due largely to the tax cuts of the Administration Trump, whose positive effect is likely to abate, according to the Conference Board again soon. Also, the International monetary Fund (IMF) estimates that – about all of the industrialized countries considered – the 2018 expansive tax effect come turns year into neutral and starting in the year 2020, the economic will inhibit.

in October, the IMF had revised its growth forecast for global gross domestic product (GDP) from 3.9 to 3.7 percent. However, even the reduced value may be according to the latest IMF statements as too optimistic. Particularly weak were to develop at present, about the capital investment.

2. Tighter monetary policy

Long as the world economy was boosted by the monetary policy tailwind. Faced with bloated balance sheets, the monetary authorities have to attract but little choice, as the screws.

The US Central Bank, the Fed has increased yesterday Wednesday the interest rates. For 2019, the predictions diverge, however, is far. Therefore, the risk that the U.S. monetary authorities press ahead more rapidly than the financial markets predict. Bianco Research indicates that investors expect according to the market indicators until the end of next year, only around two further interest rate steps. In contrast, the Fed – if you analyse the statements of the monetary authorities – 3.5 tightening in prospect.

balance sheet Federal Reserve

image to enlarge

Rising US interest rates and a stronger Dollar would force the emerging countries, meanwhile, with similar steps to follow in order to avoid capital outflows. Add to that the screaming comes in parallel to the end of balance sheet reduction by the Fed (see graph 2) climbing interest rates. The think-tank Council on Foreign Relations estimates that the streamlining corresponds to the end of 2019, a rate increase of 220 basis points.

3. Escalation of the trade dispute

As of the trade conflict between the U.S. and China developed, it is hard to predict. Although the parties to the dispute at the G have agreed-20 summit in Buenos Aires, the punitive tariffs until the beginning of March to freeze. The duration of this truce, however, will hardly be enough to solve complex discussion points such as the protection of intellectual property – just because the US demand, the Share of intellectual property to restrict the Agenda "Made contrary to in China 2025". It seems therefore quite plausible that the U.S. will increase in March, the duties on Chinese imports of 200 billion dollars by 10 to 25 percent.

US-investment activity

image to enlarge

The criminal duties are not to the detriment only of the trading activity. The uncertainty from the holding company to put the capital in the own Expansion. That degrades not just the business of the investment goods sector, but also threatens the future economic growth.

4. Turmoil in the Eurozone

The European economy. 51.4 purchasing Manager index (Composite) of the Euro-zone will move to the lowest level in 49 months – with just the two heavyweights, Germany and France in a slowdown. According to data provider IHS, Markit, the recent decline was due only in part to temporary factors, such as the yellow-Western protests, but also structural problems.

economic Europe

image to enlarge

The slowdown is taking place just in a Phase, in the upheavals on the political level, are: several key EU positions will be occupied the coming year – including the presidency of the European Central Bank (ECB) and the European Commission. Quite possible, moreover, that it comes at the top of Germany, Italy, Spain and the UK, to a change of government.

Slipping the Eurozone – for example, due to internal conflicts, such as the Budget fight with Italy – deep in the crisis, is likely to concerted to be counter-measures is significantly more difficult to implement than in the past. On the one hand, populist and EU have gained critical parties to influence. On the other hand, the ECB has been confronted with a significantly larger balance sheet, and after years of ultra low interest rates to fire-power. The analysts of HSBC estimate that new interest rate cuts, quantitative easing or "exotic" instruments, such as helicopter money could only be made in the smallest of doses.

5. High level of indebtedness

the beneficiaries of the loose monetary policy has piled up over the past few years, a handsome mountain of debt In the industrial countries, the liabilities of the state, enterprises and private in-house record keeping, in the meantime, almost 400 percent of economic output.

indebtedness of US companies

image to enlarge

many companies have increased the Leverage, is reflected in the ratio between net debt and Ebitda (earnings before interest, taxes, depreciation and amortization): US corporations, the value moves to a long-term Maximum. Recently, Jeffrey Gundlach of DoubleLine Capital, warned that almost half of the Bonds with perceived system quality would have to be classified therefore as a high-yield papers.

Also to the state of balance sheets of the monetary easing is not left unscathed. If interest rates rise, the operation of the liabilities, it is always more expensive. This limits the possibility of a slowdown with Fiscal measures to give tax.

6. China as a Black Box

The second-largest economy in the world with a variety of problems, and should provisionally be as a global economic engine. Among other things, China is suffering the consequences of the trade dispute with the United States. Recently, it has cooled the growth of the retail sales and industrial production. The former are as weak as the last fifteen years.

retail in China

image to enlarge

The fuelling expectations that the government will decide at this week's Central Economic Work Conference, additional stimulus measures for the dam. The analysts of ING have to give a yearly fiscal stimulus of 4 trillion. Yuan (580 billion Swiss francs), as well as a waiver of any further tightening measures on the property market conceivable. The economic sentiment indicator from Goldman Sachs demonstrates, however, that the recently implemented measures have so far shown little effect. In addition, the longer term goal of Deleveraging is thus further undermined.

(financial and economic)

Created: 20.12.2018, 12:02 PM