Key Themes to Focus on in 2019 – Introduction
As a trader, one of the most difficult things to ever do is to forecast what will happen in future. This is mostly because most of the news that move the market happens when no one expected. For example, very few analysts modelled the trade war and its impacts a year ago. Yet this news became the most important one in the past year. Therefore, this article will highlight a few things that could provide key themes for the year.
There is a likelihood that Special Counsel Robert Mueller will conclude his investigation into the Trump campaign and his decision to fire James Comey. This likelihood increases because 2020 will be an election year and it is very unlikely that the counsel will want to extend the investigation to that year. This is because Department of Justice regulations say that the prosecutor should not interfere with the electoral process. Therefore, while the impacts of the investigation cannot be modelled, there is a likelihood that they will lead to more political chaos in the US.
Trade was a key theme in 2018 and it will remain so this year. This is because with internet and efficient transportation, the world has become a more synchronized place. As a result, what happens in one continent tends to have implications in another place. The trade war was the major reason why the world experienced a slower growth in the year. Therefore, traders will continue to watch out for the trade issues.
Crude oil had an interesting year in 2018. After rising to three-year highs, the price declined sharply and is currently close to the 15-month low. Lower oil prices are generally better for the world economy because of the limited number of countries that benefit when the price are high. More countries import crude than those that export. The recent plunge has happened because many people expect the global demand to reduce. Therefore, traders will continue to focus on the price of crude oil and the decisions that OPEC will take.
In the United States, corporate profits were better in the year because of the impacts of the tax cuts by the Trump administration. These profits are expected to slow down as companies enter a phase of the new normal. This forecast is probably the reason why most investors have been selling their US holdings. As the year starts, so will the earning season kick off. Traders will pay close attention to the numbers that will be released by the companies.
The year ended with no clear decision on Brexit. The bill that Theresa May had negotiated failed to get a majority. Therefore, with the March 29 deadline approaching, traders will pay a close attention to what will happen next. There is a likelihood that a consensus will be made to avoid the country having a no-brexit deal because the two sides don’t want that to happen.
For two years jn a row, palladium was the best-performing metal. This has been caused by high demand and high supplies. This year, traders will pay a closer attention to the price of palladium and what it means for the precious metal industry.