Today’s Key Market Drivers: 4th January 2019
US Dollar sinks on weak manufacturing figures and falling Treasury Yields.
The US Dollar along with the US share market fell sharply on Thursday following a weaker than expected December manufacturing number that confirmed the US economy is likely at the beginning of an economic slowdown. Data still showed expansion in the US manufacturing sector however the reading was 54.1 vs the 57.9 the market expected. Any reading under 50 indicates contraction and yesterday’s China manufacturing numbers were under 50 for the first time in years. Fears have been rising that the worlds leading economies will likely slow in 2019 and virtually all of the major investment banks are warning their “professional investors” to be ready for lower growth in 2019. One reason why the US Dollar rallied strongly in 2018 was the rising yield on the 10 Year US Government Bond which hit 3.26% in November but has since been sliding back lower and Thursday’s trading session saw it fall to a 12-month low of 2.56%, a level not seen since January 2018. The S&P 500 fell 2.3% and the Dow Jones 2.6% as Apple’s share price continued to lead the way lower. CEO Tim Cook earlier this week announced that Apple expected weaker revenues in the first quarter and partly blamed a slowdown in China.
Warren Buffett is going to be buying more Apple stock at these prices.
Berkshire Hathaway owns roughly 20% of Apple and Warren Buffett has said on a number of occasions he likes the company so much that he’d like to own it. Buffett’s preference is to buy companies these days rather than simply own shares in one so the plunge in Apple’s share price is highly likely going to see Buffett buying Apple stock and a lot of it! As Buffett says. “Apple has a moat around it”. It’s one of the greatest brands of all time along with being the world’s #1 technology company. It has tens of billions of dollars in cash and if you invest with a long-term view Apple, in my opinion, is ripe for the picking and over the course of time its share price will highly likely rise and return investors handsome profits. If you believe in the US economy and its strength and resilience the current pull back on financial markets is a massive buying opportunity.
Aussie and Kiwi Dollars bounce following Railgun Flash Crash.
After plunging to a 10 year low of 0.6720 around 10.00am AEST on Thursday the AUS v USD has rallied back to Wednesday’s closing price thanks to a sharp sell-off on the US Dollar. The rally on both the AUD and NZD had nothing to do with any positive news down under it was selling of US Dollars that drove both local currencies back higher. The AUD v USD will likely close Thursday’s trading session just above 0.70c, however, I firmly believe a US bear market for stocks and a slowing economy in China is going to ultimately see the AUD moving back lower in coming days and weeks. Unless the Chinese Government decides to inject a large stimulus package to ensure it maintains growth above 5% or 6% commodity prices will continue to fall along with the local currency.
In other news.
You simply Must-read Ray Dalio’s take on financial markets.
I Tweeted about it, I sent you a Trade Time Alert about it, I posted it on my Train With Andrew Facebook page and I’ve mentioned it about a dozen times in videos I have produced over the Xmas break. If you’ve read it, thumbs up! If you haven’t read it then you MUST read it. Sure, it’s a long read but if you are genuinely serious about looking after your own money then stretch, take the time and please read it. I am dedicating my first 2019 Train With Andrew Podcast (released next week) to explain what he is telling investors. So, if you have read it my Podcast is going to help clear up some of the content you may not have understood. If you have a question for me about any of the content within the article jump onto my Train With Andrew Facebook page and post a question in the comments section of the last post I made about Ray Dalio’s article.
Official US Employment figures are due today.
December US jobs figures are released today along with average hourly and weekly earnings numbers. The market is expecting the US to have added 180,000 jobs in the month of December and the unemployment rate to be 3.7%. If the jobs number misses and comes in under 180,000 this will only add to the already negative sentiment surrounding growth moving forward in 2019.
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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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