Today’s Key Market Drivers: 15th October 2019

EU says intense negotiations are underway.


The Pound was up and down like a yoyo on Monday as the Queen addressed parliament and the European Union said “intense negotiations” were taking place to try and come to a deal before October 31.

The Pound rallied very strongly on Thursday last week after officials appeared to agree on a way forward with respect to the border between Ireland and Northern Ireland. Expect to see continued volatility on the Queen’s currency in coming weeks and my thoughts are the Pound will likely end up weaker rather than stronger post-October 31.

Trump embellishes the truth on China trade discussions.


It shouldn’t surprise anyone to know President Trump embellished the truth when it came to the trade negotiations with China over the weekend. The US President said “a very substantial phase 1 deal” had been agreed too and a formal agreement would be drawn up over the coming 3 weeks. The Chinese, on the other hand, told a different story on Monday saying they would like further trade negotiations before agreeing to or signing any phase 1 deal. In fact, according to CBNC, the Chinese did not use the word “deal”, instead saying “substantial progress” has been made.

As I suggested in Sunday’s Pre-Market Prep video the market will want more details and the far more dovish comments from the Chinese about the trade discussions resulted in stocks pulling off their highs and US Dollar regaining much of its lost ground from Friday.


US company earnings season is about to begin.


The upcoming US company earnings season has the potential to drag back US stock indexes and send safe haven currencies higher. If for the first time in years some of the biggest US companies show slowing growth and weaker than expected profit results investors may pull money out of stock portfolios and into fixed income and this would result in the Yen and Swiss Franc rallying. The latest reports show economists expect earnings to have fallen on average around 4.6%. A dip in US company earnings would also likely send the US Dollar higher as the greenback is the worlds ultimate safe-haven currency.

In other news.


China inflation data and the RBA monthly minutes will be closely eyed in the Asian trading session today. Thursday’s Aussie jobs report will be critical to the short-term direction of the local currency with the RBA likely to remind traders in today’s Minutes that the unemployment rate remains the Central Banks biggest concern. If Thursday’s jobs number disappoints again the RBA will drop rates on Melbourne Cup Day.

Bank of England Governor Mark Carney is speaking in the UK Parliament on Tuesday and with only two weeks remaining until the UK is supposed to leave the European Union, the market will be listening for any comments on what the BOE may do with interest rates in coming months. It is widely tipped the BOE will lower the cash rate back to 0% if the UK crashes out of the EU and if this did occur the Pound would fall substantially in value. My expectation is the UK will need to ask for an extension and this will drag on the currency in the short term.

Back in 2009 if you bought the US S&P 500 ETF and held it until today you would have beaten Warren Buffett’s returns over the past 10 years. Buffett’s Berkshire Hathaway class A shares returned 323% over the past 10 years however the broad S&P 500 returned 334%. I will talk more about ETF’s in this Friday’s Money Exchange and explain why ETF’s are a great investment vehicle for your kids and grandkids.


New dawn, new day, new opportunity. Get after it, don’t procrastinate and never make excuses.

AB

About the Author: Andrew Barnett

Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).

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