IMF hoping for a ‘more comprehensive’ US-China deal as the months go by

DAVOS, Switzerland — The International Monetary Fund (IMF) is hoping that China and the United States will reach a broader trade agreement in the coming months, despite the recent signing of their “phase one” deal. “While we have had positive news with the U.S.-China ‘phase one’ trade deal, there’s obviously a lot more that still needs to be done,” Gita Gopinath, the IMF’s chief economist, told CNBC Monday. “We would hope there would be a more comprehensive deal between the U.S. and China as the


DAVOS, Switzerland — The International Monetary Fund (IMF) is hoping that China and the United States will reach a broader trade agreement in the coming months, despite the recent signing of their “phase one” deal.
“While we have had positive news with the U.S.-China ‘phase one’ trade deal, there’s obviously a lot more that still needs to be done,” Gita Gopinath, the IMF’s chief economist, told CNBC Monday.
“We would hope there would be a more comprehensive deal between the U.S. and China as the
IMF hoping for a ‘more comprehensive’ US-China deal as the months go by Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: silvia amaro
Keywords: news, cnbc, companies, deal, months, trade, growth, phase, gopinath, imf, hoping, comprehensive, davos, uschina, economic, china


IMF hoping for a 'more comprehensive' US-China deal as the months go by

DAVOS, Switzerland — The International Monetary Fund (IMF) is hoping that China and the United States will reach a broader trade agreement in the coming months, despite the recent signing of their “phase one” deal.

The two largest economies in the world agreed to roll back some of their existing trade tariffs last week in what was dubbed as a “phase one” deal. The agreement also envisaged higher Chinese purchases of U.S. agricultural goods and it was seen as a temporary truce in a two-year-long dispute between Washington, D.C., and Beijing. However, the IMF is expecting more from both nations.

“While we have had positive news with the U.S.-China ‘phase one’ trade deal, there’s obviously a lot more that still needs to be done,” Gita Gopinath, the IMF’s chief economist, told CNBC Monday.

“We would hope there would be a more comprehensive deal between the U.S. and China as the months go by,” Gopinath also told CNBC at the World Economic Forum in Davos, Switzerland.

In its latest economic update, released Monday, the IMF trimmed its global growth forecasts. The Fund now expects a global growth rate of 3.3% for 2020. In the report, the IMF also warned that trade tensions and disruptions could return.

The signing of the deal is expected to boost the Chinese economy slightly. The IMF upped its growth forecast for China by 0.2 percentage points for 2020 to 6%.

“However, unresolved disputes on broader U.S.-China economic relations, as well as needed domestic financial regulatory strengthening, are expected to continue weighing on activity,” the IMF said Monday.

Speaking to CNBC at Davos, Gopinath added that “trade tensions and disruptions is something that we put out there as an important risk.”


Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: silvia amaro
Keywords: news, cnbc, companies, deal, months, trade, growth, phase, gopinath, imf, hoping, comprehensive, davos, uschina, economic, china


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European stocks slightly lower as caution returns ahead of Davos

European markets traded slightly lower on Monday as policymakers and business leaders gather in Davos, Switzerland for the annual World Economic Forum (WEF) conference . The pan-European Stoxx 600 was down 0.1% during afternoon trade, with household goods falling 0.9% to lead losses while insurance stocks added 0.5%. Climate change and sustainable business will be a key focus for delegates at this year’s WEF summit, but other political risks such as international trade and geopolitical instabili


European markets traded slightly lower on Monday as policymakers and business leaders gather in Davos, Switzerland for the annual World Economic Forum (WEF) conference .
The pan-European Stoxx 600 was down 0.1% during afternoon trade, with household goods falling 0.9% to lead losses while insurance stocks added 0.5%.
Climate change and sustainable business will be a key focus for delegates at this year’s WEF summit, but other political risks such as international trade and geopolitical instabili
European stocks slightly lower as caution returns ahead of Davos Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: elliot smith chloe taylor, elliot smith, chloe taylor
Keywords: news, cnbc, companies, business, worlds, unchanged, traded, tensions, returns, caution, davos, trade, wef, trump, slightly, lower, vice, stocks, world, ahead, european


European stocks slightly lower as caution returns ahead of Davos

European markets traded slightly lower on Monday as policymakers and business leaders gather in Davos, Switzerland for the annual World Economic Forum (WEF) conference .

The pan-European Stoxx 600 was down 0.1% during afternoon trade, with household goods falling 0.9% to lead losses while insurance stocks added 0.5%.

Climate change and sustainable business will be a key focus for delegates at this year’s WEF summit, but other political risks such as international trade and geopolitical instability are also likely to be on the agenda.

Elsewhere, the People’s Bank of China kept its loan prime rate unchanged on Monday, sending Asian shares higher. The decision came after President Donald Trump and Chinese Vice Premier Liu He signed a long-awaited “phase one” trade deal on Wednesday, easing tensions between the world’s two largest economies.


Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: elliot smith chloe taylor, elliot smith, chloe taylor
Keywords: news, cnbc, companies, business, worlds, unchanged, traded, tensions, returns, caution, davos, trade, wef, trump, slightly, lower, vice, stocks, world, ahead, european


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Tenuous US-China trade deal comes as Beijing and Washington remain on a permanent collision course

Chinese President Xi Jinping (R) and US President Donald Trump at the Great Hall of the People in Beijing on November 9, 2017. By sharply accelerating in recent months its trade adjustment with the U.S., China has finally done what it should have initiated more than two years ago. Beijing is on the way to seriously dismantling Washington’s economic and political leverage over China’s economy. During 11 months of last year, China stepped up the rate of decline of its trade surplus with the U.S. t


Chinese President Xi Jinping (R) and US President Donald Trump at the Great Hall of the People in Beijing on November 9, 2017.
By sharply accelerating in recent months its trade adjustment with the U.S., China has finally done what it should have initiated more than two years ago.
Beijing is on the way to seriously dismantling Washington’s economic and political leverage over China’s economy.
During 11 months of last year, China stepped up the rate of decline of its trade surplus with the U.S. t
Tenuous US-China trade deal comes as Beijing and Washington remain on a permanent collision course Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: dr michael ivanovitch
Keywords: news, cnbc, companies, rate, western, trade, permanent, collision, chinese, uschina, beijing, strategic, washington, tenuous, surplus, course, china, american, deal, comes, remain, chinas


Tenuous US-China trade deal comes as Beijing and Washington remain on a permanent collision course

Chinese President Xi Jinping (R) and US President Donald Trump at the Great Hall of the People in Beijing on November 9, 2017.

By sharply accelerating in recent months its trade adjustment with the U.S., China has finally done what it should have initiated more than two years ago.

Beijing is on the way to seriously dismantling Washington’s economic and political leverage over China’s economy. During 11 months of last year, China stepped up the rate of decline of its trade surplus with the U.S. to 16.2%.

Feverish sinologists would call that “decoupling” — a misnomer for China’s belated exit from a position of an excessive and unsustainable trade surplus with the U.S.

Those sinologists don’t seem to notice that China is getting out of that self-imposed structural trap by aggressively slashing its U.S. purchases at an annual rate of 12% between January and November of last year.

Instead of worrying about “decoupling,” advocates of friendly U.S.-China ties should remind Beijing that it should be doing exactly the opposite — by drastically stepping up imports of American goods and services. If the Chinese did that, they would not have to abandon their U.S. markets by cutting exports at an annual rate of 15.2%, as they did for nearly all of last year.

So, the question is: Who is in a hurry to “decouple?”

Looking at trade flows and China’s declining holdings of U.S. debt, the Chinese have apparently concluded that a rapid narrowing of U.S. exposure was a matter of their national interest.

That conclusion has come after years of pleading for a “win-win cooperation,” while Washington kept trying to contain China’s growing global economic and political influence. Instead of cooperation, the U.S. defined its relationship with China as a strategic competition with a country seeking to destroy the Western (i.e., American) world order.

Cooperation made sense for China because it meant an open access to U.S. markets and technology transfers. The U.S., however, finally began to see things differently as it woke up from its evanescing dream that an increasingly prosperous China would shake off its communist rule and join the U.S.-led Western community.

What followed was a radical U.S. policy change Beijing apparently did not expect. China’s huge, and growing, American trade surpluses became an imminent strategic danger that had to be fought by tariffs, sanctions and strict limits to Chinese investments in the U.S. economy.


Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: dr michael ivanovitch
Keywords: news, cnbc, companies, rate, western, trade, permanent, collision, chinese, uschina, beijing, strategic, washington, tenuous, surplus, course, china, american, deal, comes, remain, chinas


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There’s a 50% chance the US-China ‘phase one’ deal could fall apart in one year

There’s a 50% chance the U.S.-China “phase one” trade deal could survive its first year — but that probability falls to 25% in the second year, a business consultant said on Monday. Richard Martin, managing director at management consulting firm IMA Asia, said there are two reasons why the agreement could fall apart within those time frames: Limited success stories of government-mandated trade in the past, and provisions that allow the U.S. and China to walk away from their deal. “There’s a very


There’s a 50% chance the U.S.-China “phase one” trade deal could survive its first year — but that probability falls to 25% in the second year, a business consultant said on Monday.
Richard Martin, managing director at management consulting firm IMA Asia, said there are two reasons why the agreement could fall apart within those time frames: Limited success stories of government-mandated trade in the past, and provisions that allow the U.S. and China to walk away from their deal.
“There’s a very
There’s a 50% chance the US-China ‘phase one’ deal could fall apart in one year Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: yen nee lee
Keywords: news, cnbc, companies, chance, phase, trade, agreement, uschina, theres, thats, apart, fall, chinas, away, china, deal, walk, governmentmandated


There's a 50% chance the US-China 'phase one' deal could fall apart in one year

President Donald Trump, and Chinas Vice Premier Liu He(L), the countrys top trade negotiator, shake hands after signing trade agreements between the US and China during a ceremony in the East Room of the White House in Washington, DC on January 15, 2020.

There’s a 50% chance the U.S.-China “phase one” trade deal could survive its first year — but that probability falls to 25% in the second year, a business consultant said on Monday.

Richard Martin, managing director at management consulting firm IMA Asia, said there are two reasons why the agreement could fall apart within those time frames: Limited success stories of government-mandated trade in the past, and provisions that allow the U.S. and China to walk away from their deal.

“There’s a very poor track record on government-mandated trade flows working out and that’s what we got right now,” he told CNBC’s “Squawk Box Asia.”

“We don’t like governments to go out and say this is the volume of trade and this is the price point we want done at — that’s meant to be said at the markets,” he said.

Martin added that if there are disputes between the two sides, the deal allows the U.S. Trade Representative, currently Robert Lighthizer, to “pretty much determine when China’s breaking the rules and inflict any penalty he wants.” In return, China could walk away from the agreement, he explained.

“So that’s not a very robust adjudication process. It says that if there’s a problem, it could well end in the phase one package being dead,” he said.


Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: yen nee lee
Keywords: news, cnbc, companies, chance, phase, trade, agreement, uschina, theres, thats, apart, fall, chinas, away, china, deal, walk, governmentmandated


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IMF says the outlook for the global economy ‘remains sluggish’ as it cuts growth forecasts

Mandel Ngan | AFP | Getty ImagesThe International Monetary Fund (IMF) has become less optimistic about global growth, warning that the outlook remains sluggish and there are no clear signs of a turning point. The Washington-based institution forecast in October a global growth rate of 3% for 2019 and of 3.4% for 2020. “The projected recovery for global growth remains uncertain. However, the IMF is cautious about the state of the global economy going forward, in particular about further trade ten


Mandel Ngan | AFP | Getty ImagesThe International Monetary Fund (IMF) has become less optimistic about global growth, warning that the outlook remains sluggish and there are no clear signs of a turning point.
The Washington-based institution forecast in October a global growth rate of 3% for 2019 and of 3.4% for 2020.
“The projected recovery for global growth remains uncertain.
However, the IMF is cautious about the state of the global economy going forward, in particular about further trade ten
IMF says the outlook for the global economy ‘remains sluggish’ as it cuts growth forecasts Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: silvia amaro
Keywords: news, cnbc, companies, cuts, sluggish, economies, economy, remains, growth, outlook, global, gopinath, tensions, forecasts, fund, imf, deal, trade, monetary


IMF says the outlook for the global economy 'remains sluggish' as it cuts growth forecasts

The seal of the International Monetary Fund(IMF) is seen outside of the headquarters building in Washington, DC on April 8, 2019. Mandel Ngan | AFP | Getty Images

The International Monetary Fund (IMF) has become less optimistic about global growth, warning that the outlook remains sluggish and there are no clear signs of a turning point. The Washington-based institution forecast in October a global growth rate of 3% for 2019 and of 3.4% for 2020. The IMF has now revised down those forecasts to 2.9% and 3.3%, respectively. The downward revision was mostly due to lower growth in India. For 2021, the Fund has forecast a growth rate of 3.4%. “The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels,” Gita Gopinath, the IMF’s chief economist, said in a written statement. Nonetheless, the Fund noted that some of the biggest economic uncertainties, highlighted in October, have dissipated. “Some risks have partially receded with the announcement of a U.S.-China Phase I trade deal and lower likelihood of a no-deal Brexit,” Gopinath said.

The U.S. signed a “phase one” trade deal with China last week. Though the deal has kept some of the existing trade tariffs, it was interpreted as a truce by markets in the heated dispute that started back in 2018. Meanwhile in the U.K., lawmakers have approved an agreement that outlines how the country will leave the European Union, scheduled for January 31. The approval allows the U.K. to avoid an abrupt breakup from the EU later this month and gives more certainty to business and citizens on both sides of the English Channel, at least until the end of 2020. In addition, the IMF has said that central banks are expected to keep supporting their respective economies. “Monetary policy has continued to support growth and buoyant financial conditions. With these developments, there are now tentative signs that global growth may be stabilizing, though at subdued levels,” Gopinath also said in the report. However, the IMF is cautious about the state of the global economy going forward, in particular about further trade tensions. “New trade tensions could emerge between the United States and the European Union, and U.S.-China trade tensions could return,” Gopinath said.


Company: cnbc, Activity: cnbc, Date: 2020-01-20  Authors: silvia amaro
Keywords: news, cnbc, companies, cuts, sluggish, economies, economy, remains, growth, outlook, global, gopinath, tensions, forecasts, fund, imf, deal, trade, monetary


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These five companies reporting earnings in the week ahead almost always beat the Street

Of the hundreds of big companies set to report earnings next week, there are five key names that investors should be focused on as these companies almost always top expectations. CNBC crunched the numbers using data from Bespoke Investment Group and found five stocks that nearly always beat Wall Street’s earnings forecasts. Plus, these companies normally trade positive after their surefire earnings beat.


Of the hundreds of big companies set to report earnings next week, there are five key names that investors should be focused on as these companies almost always top expectations.
CNBC crunched the numbers using data from Bespoke Investment Group and found five stocks that nearly always beat Wall Street’s earnings forecasts.
Plus, these companies normally trade positive after their surefire earnings beat.
These five companies reporting earnings in the week ahead almost always beat the Street Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-19  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, street, trade, wall, companies, beat, surefire, stocks, using, ahead, week, reporting, streets, earnings


These five companies reporting earnings in the week ahead almost always beat the Street

Of the hundreds of big companies set to report earnings next week, there are five key names that investors should be focused on as these companies almost always top expectations.

CNBC crunched the numbers using data from Bespoke Investment Group and found five stocks that nearly always beat Wall Street’s earnings forecasts. Plus, these companies normally trade positive after their surefire earnings beat.


Company: cnbc, Activity: cnbc, Date: 2020-01-19  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, street, trade, wall, companies, beat, surefire, stocks, using, ahead, week, reporting, streets, earnings


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Europe will engage rather than confront China in trade, EU ambassador to China says

The European Union will take “a different approach” than the U.S. when it comes to managing the trade relationship with China, the EU ambassador to China told CNBC on Friday. Ambassador Nicolas Chapuis emphasized, however, that the EU is “in the same boat” as the U.S. despite the divergence. Nicolas Chapuis EU ambassador to ChinaEU Trade Commissioner Phil Hogan said on Thursday that the EU will be closely monitoring the newly signed “phase one” trade deal between Washington and Beijing, to ensur


The European Union will take “a different approach” than the U.S. when it comes to managing the trade relationship with China, the EU ambassador to China told CNBC on Friday.
Ambassador Nicolas Chapuis emphasized, however, that the EU is “in the same boat” as the U.S. despite the divergence.
Nicolas Chapuis EU ambassador to ChinaEU Trade Commissioner Phil Hogan said on Thursday that the EU will be closely monitoring the newly signed “phase one” trade deal between Washington and Beijing, to ensur
Europe will engage rather than confront China in trade, EU ambassador to China says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: grace shao
Keywords: news, cnbc, companies, told, deals, chapuis, europe, china, engage, confront, ambassador, deal, uschina, wto, trade


Europe will engage rather than confront China in trade, EU ambassador to China says

The European Union will take “a different approach” than the U.S. when it comes to managing the trade relationship with China, the EU ambassador to China told CNBC on Friday. Ambassador Nicolas Chapuis emphasized, however, that the EU is “in the same boat” as the U.S. despite the divergence. “We think that policy of engagement, clarity, the possibility to strike smart deals, to take stock of China’s innovation policies and formidable economy of this country is of interest to us and engagement rather confrontation is the right path,” Chapuis told CNBC’s “Street Signs.” The ambassador said that the EU is working to deliver “a smart and sensible agreement” and that his staff will “take stock of the potential of economic, trade, political relationship between the EU and China.”

The fact that trade tensions may be reduced, thanks to the U.S.-China deal is good news. On the other hand, managed trade, quantitative targets, bilateral deals, this is not what a global world needs. Nicolas Chapuis EU ambassador to China

EU Trade Commissioner Phil Hogan said on Thursday that the EU will be closely monitoring the newly signed “phase one” trade deal between Washington and Beijing, to ensure it complies with WTO rules. “As my commissioner said… we do not like bilateral arrangements in globalization. Of course, the U.S. is entitled to any deal it wishes with China. But if it is not WTO compatible, then we have an issue,” the ambassador said. The EU will monitor progress on the U.S.-China deal “extremely closely to see if our concerns on managed trade, on quantitative targets are valid or not,” said Chapuis. He said that he received a call from Chinese officials after the deal was signed that assured the EU “will not be impacted by the U.S.-China trade deal.”

US-China trade deal’s global impact


Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: grace shao
Keywords: news, cnbc, companies, told, deals, chapuis, europe, china, engage, confront, ambassador, deal, uschina, wto, trade


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Stanley Druckenmiller is still bullish the market because of the Fed and Trump

Hedge fund manager Stanley Druckenmiller said Friday he agrees with fellow billionaire investor David Tepper’s optimism on the market and said he, too, is still “riding the horse.” “I revealed a very bullish posture intermediate term since October when [Fed Chairman Jerome] Powell guaranteed he would not rescind the insurance cuts,” Druckenmiller said in an email to CNBC’s Joe Kernen. “So I am still ‘riding the horse’ and bullish immediate term,” echoing a phrase used by Tepper in an earlier ema


Hedge fund manager Stanley Druckenmiller said Friday he agrees with fellow billionaire investor David Tepper’s optimism on the market and said he, too, is still “riding the horse.”
“I revealed a very bullish posture intermediate term since October when [Fed Chairman Jerome] Powell guaranteed he would not rescind the insurance cuts,” Druckenmiller said in an email to CNBC’s Joe Kernen.
“So I am still ‘riding the horse’ and bullish immediate term,” echoing a phrase used by Tepper in an earlier ema
Stanley Druckenmiller is still bullish the market because of the Fed and Trump Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: thomas franck
Keywords: news, cnbc, companies, bullish, investor, trump, riding, returns, rally, market, term, trade, stanley, hedge, fund, fed, druckenmiller


Stanley Druckenmiller is still bullish the market because of the Fed and Trump

Hedge fund manager Stanley Druckenmiller said Friday he agrees with fellow billionaire investor David Tepper’s optimism on the market and said he, too, is still “riding the horse.”

“I revealed a very bullish posture intermediate term since October when [Fed Chairman Jerome] Powell guaranteed he would not rescind the insurance cuts,” Druckenmiller said in an email to CNBC’s Joe Kernen. “Since then, both have worked out and the Fed is still whining about inflation being below target.”

“In addition, Trump’s election prospects have increased with two trade agreements and big win in Iran which the Democrats have responded poorly to,” he added. “So I am still ‘riding the horse’ and bullish immediate term,” echoing a phrase used by Tepper in an earlier email to Kernan.

Druckenmiller’s comments come as U.S. equities prolong the longest bull market in U.S. history that began in March 2009. The S&P 500 has skyrocketed more than 380% since then and on Thursday reached an all-time high north of 3,300.

The investor said as recently as December he was frustrated he didn’t take more risk in 2019 and was therefore unable to fully capitalize on the stock market’s red-hot rally. The Duquesne Family Office, which Druckenmiller oversees, only broke into double-digit returns for the year in the final weeks of 2019, well behind the S&P’s 29% rally for the year.

He blamed the lackluster returns on his conservative bet in June, when he loaded up on U.S. Treasurys after President Donald Trump sent a tweet in May that inflamed U.S.-China trade tensions. Before that, he said, he had been “93% invested in the market.”

In the early 1990s, at the helm of the Soros Fund Management, Druckenmiller orchestrated a series of trades that capitalized off the British pound sinking and yielded a profit of about $1 billion. His performance while running Duquense Capital, his now-shuttered hedge fund, clocked in with an average of 30% annually to investors.


Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: thomas franck
Keywords: news, cnbc, companies, bullish, investor, trump, riding, returns, rally, market, term, trade, stanley, hedge, fund, fed, druckenmiller


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Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve Odland

Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve OdlandSteve Odland, The Conference Board CEO, joins ‘The Exchange’ to discuss the U.S.-China ‘phase one’ trade deal.


Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve OdlandSteve Odland, The Conference Board CEO, joins ‘The Exchange’ to discuss the U.S.-China ‘phase one’ trade deal.
Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve Odland Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-17
Keywords: news, cnbc, companies, uncertainty, ceo, odland, phase, board, trade, progress, steve, removes, perfect, conference, uschina, makes


Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve Odland

Phase One not perfect, but it makes progress and removes uncertainty: Conference Board CEO Steve Odland

Steve Odland, The Conference Board CEO, joins ‘The Exchange’ to discuss the U.S.-China ‘phase one’ trade deal.


Company: cnbc, Activity: cnbc, Date: 2020-01-17
Keywords: news, cnbc, companies, uncertainty, ceo, odland, phase, board, trade, progress, steve, removes, perfect, conference, uschina, makes


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As stocks hit more and more records, there are signs traders may be getting way too euphoric

The S&P 500 has already jumped nearly 3% for 2020, rising more than 1% this week to reach fresh record highs. Historically, the S&P 500 has lost an average of 5% annually since 2006 when the composite is above 62.5, or showing excessive optimism. The S&P 500 has also gone a long time without posting a big drawdown. Still, overall S&P 500 earnings are still forecast to fall by more than 2% for the fourth quarter following last week’s reports. The forward S&P 500 price-to-earnings ratio — a widely


The S&P 500 has already jumped nearly 3% for 2020, rising more than 1% this week to reach fresh record highs.
Historically, the S&P 500 has lost an average of 5% annually since 2006 when the composite is above 62.5, or showing excessive optimism.
The S&P 500 has also gone a long time without posting a big drawdown.
Still, overall S&P 500 earnings are still forecast to fall by more than 2% for the fourth quarter following last week’s reports.
The forward S&P 500 price-to-earnings ratio — a widely
As stocks hit more and more records, there are signs traders may be getting way too euphoric Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: fred imbert
Keywords: news, cnbc, companies, way, stocks, euphoric, hit, earnings, does, signs, 500, trading, investors, market, markets, trade, traders, records, getting, davis


As stocks hit more and more records, there are signs traders may be getting way too euphoric

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 15, 2020. Brendan McDermid | Reuters

Wall Street may be getting a bit too excited about the stock market’s hot start to the new year. The S&P 500 has already jumped nearly 3% for 2020, rising more than 1% this week to reach fresh record highs. But as the market keeps going up, traders are becoming overly optimistic about equities, data compiled by Ned Davis Research shows. The Ned Davis Daily Trading Sentiment Composite — which measures how optimistic or pessimistic traders are — currently sits at 80, squarely in “excessive optimism” territory. The measure also hit its highest level since June 2018 recently. Historically, the S&P 500 has lost an average of 5% annually since 2006 when the composite is above 62.5, or showing excessive optimism.

Ned Davis Research’s data is not the only one showing potential euphoria in the market, either. Other experts point out that valuations are at historic highs on some measures while earnings expectations are lackluster at best. Some also note trade tensions between China and the U.S. could flare up once again even after the signing of a phase one agreement. If investors are not careful, they could suffer steep losses after the market’s recent rally. “Shorter-term sentiment is extremely optimistic,” Ned Davis, senior investment analyst and founder of Ned Davis Research, said in a note. “Investors tend to be optimistic entering a new year, with lots of inflows to IRA’s and pension plans, but this still shows very high and rising short-term risks.” Equities have largely refused to go down in 2020 thus far. Through 12 trading days this year, the S&P 500 has closed lower just four times. The biggest of those four declines came on Jan. 3, when the broad average slid 0.7%. The S&P 500 has also gone a long time without posting a big drawdown. The average’s last one-day pullback of at least 1% happened Oct. 8, when it plunged more than 1.5%. That amounts to 70 trading days since the market’s most-recent 1% drop.

Make no mistake, this market move is NOT normal, and is NOT something which should be able to continue technically into and through February without a major hiccup. Mark Newton managing member, Newton Advisors

Investors have been lifting stock prices since mid-October amid hopes that China and the U.S. would strike some sort of trade deal. Those expectations materialized on Wednesday, with both sides signing a so-called phase one trade agreement. However, the deal does not remove existing U.S. tariffs on Chinese goods. It also lets the Trump administration raise tariffs targeting China if the country does not hold up its end of the deal. These aspects of the agreement have led some market analysts to call it “fragile” as the possibility for more levies remains. Still, the market continues to notch record highs. “There’s a lot of momentum in the market right now. I think people are looking for something to kind of bring us down a little bit,” said Christian Fromhertz, CEO of The Tribeca Trade Group. “How does that end? We don’t really know.” That momentum has been provided in large part by mega-cap stocks such as Microsoft, Apple and Google-parent Alphabet. Microsoft and Apple are both trading around record highs, while Alphabet’s market capitalization broke above $1 trillion for the first time on Thursday. “Risk wise there is not necessarily any fundamental that could tip things, but I do think sentiment has gotten a bit frothy,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “That in it of itself doesn’t suggest a problem for the market, but it does establish some vulnerability than if investors were more skeptical.”

Strong earnings needed

This recent run-up also puts more pressure on corporate earnings. The corporate reporting season kicked off last week with big banks such as J.P. Morgan Chase, Citigroup, Morgan Stanley and Bank of America all posting quarterly numbers that exceeded expectations. In all, about 8.7% of S&P 500 companies have reported earnings thus far. Of those companies, 72% have posted calendar fourth-quarter earnings that beat analyst expectations, FactSet data shows. Still, overall S&P 500 earnings are still forecast to fall by more than 2% for the fourth quarter following last week’s reports. Without solid earnings growth, it will be hard for investors to justify the market’s high valuations. “While equities are clearing enjoying a strong period of momentum and investors obviously seem comfortable w/higher multiples, it’s hard to see the present ~19x valuation sustaining,” wrote Adam Crisafulli, founder of Vital Knowledge.

The forward S&P 500 price-to-earnings ratio — a widely used valuation metric on Wall Street — currently sits around 18.6, its highest level since January 2018. Meanwhile, the market cap-to-GDP ratio — which measures the stock market’s size relative to the economy — is at an all-time high. To be sure, Piper Sandler’s Craig Johnson points out that just because the market is overbought, it does not mean this bullish trend will end any time soon. “Historically, overbought conditions can persist for meaningful periods before either a time or price correction develops,” he said.

January 2018 redux?


Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: fred imbert
Keywords: news, cnbc, companies, way, stocks, euphoric, hit, earnings, does, signs, 500, trading, investors, market, markets, trade, traders, records, getting, davis


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