09|17|2019

Super Mario Strikes Again | September 13, 2019

photo of owner Jay Roque Financial Services-time and money icon Financial Future Services Monument Colorado AUTHOR: Jason J. Roque, CFP®, APMA®

TITLE:       Investment Adviser Rep – CCO

TAGS:       TRADE, STOCKS, EUROPE, BREXIT

Super Mario strikes again, UK parliament regains control, and the US and China agreeing…. Does the data signal on-going growth or a short-term rally?

Trade

Optimism over the potential of a small trade deal increased last week.  Both sides made conciliations this week that gave indication that they are motivated to get a deal done.  No deal is done, so any optimism over progress should be taken with a grain of salt.

European Union (EU)

The President of the European Central Bank (ECB) introduced a new stimulus plan last week. This new version of quantitative easing consists of €20B in purchases per month and the key interest rate was dropped to -0.5%. Mario Draghi indicated that the purchase program would remain in place until the ECB was ready to raise rates again. It could be a very long time before we see rates go up in European Union (EU). This puts Europe in a very similar position as Japan has been in for the last 20 years. Out-going ECB President Draghi appealed to EU law makers for fiscal efforts to stimulate the economy. This plea comes as the ECB has likely exhausted their best tools.

Brexit

The United Kingdom moved one step closer to an ORDERLY exit from the EU. Not really, they actually have just moved closer to extending the deadline from 10/31 to 12/31. The UK parliament passed a law requiring the current Prime Minister request an extension from the EU.

Conclusion

The S&P rose last week under the support of this data. The struggle with these supporting pieces is that Brexit could fall apart next week, as could trade talks. The ECB, while delivering what the markets needed, admitted that they were essentially out of weapons. Good news for the sake of bad news is not really good news…

 

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