China’s Slowing Down

On this morning’s Trey Ware Show, Karl & Trey discussed how China’s economy affects the U.S.

Trey Ware:                         Karl, the headline that I’m looking at right now, ‘China’s Economic Growth Slumps to the Slowest Pace Since 1990’. What, if anything, does that mean for you and me?

Karl Eggerss:                      Well, it’s a big deal because, obviously, the US and China, two huge economies, so as they go the rest of the world goes to a certain extent. So as China’s slowing, that’s been the thing Trey that the Chinese economy slowing a little bit, the U.S. economy slowing just a little bit, and the Feds have been raising rates. So that combination hasn’t worked real well as you saw in December for the stock market, but now the Fed has acknowledged that things are starting to slow a bit.

Karl Eggerss:                      So the next thing we need is we need to see better economic numbers, not only in China but the US, and we’re going to start seeing a lot of these earnings reports from Wall Street come in this week. The market is closed today, of course. We’ll open back up tomorrow, but as these earnings come in let’s see if things are stabilized and things are okay. If they are, this market can advance higher. But you saw those trade talks improving last week. A lot of different things happening which is what we’ve been saying, is that we need to see improvement out of these trade talks, but what they’re still stuck on, of course, is this intellectual property. That’s the part that … To me, that’s not going to get resolved over the next few days or weeks. That’s a long process. I think if we can continue to see improvement in the trade talks the stock market will continue to rise.

Trey Ware:                         Also, we’re seeing with the new trade deals that are coming online, you talk about short term advances, that’s not really a short term advance. That’s something that could be many, many years. Donald Trump’s likely to not be president when we start to see the benefits of having a better trade deal, whether it is a new NAFTA which is not called that, or a new trade deal with China, whatever the case might be, trade deals that work better for the US worker instead of sucking jobs out of the country allowing jobs to have the opportunity to compete fairly here in the United States, right?

Karl Eggerss:                      Sure. Yeah, and I think these tariffs, hopefully, we heard some rumors last week that the tariffs might come down. Hopefully that’s just a negotiating tool because tariffs, ultimately, are going to cost a lot of us money. We do need to fix the trade in balance with China. There’s no doubt about that. I think tariffs are something that, hopefully, is again, a negotiating tool, and is something that has scared everybody including China. Maybe that’s bringing everybody to the table. We’ll see. Clearly, the market did not like tariffs, and we saw that last year all throughout 2018. We did hear some rumors late in the week last week that, perhaps, some of this is being talked down a bit and that’s great for everybody’s 401Ks because the market has one of the strongest starts to a year that we’ve seen in decades. So it’s been a very strong start to the year. So hopefully folks have been adjusting their portfolios and not panicking out in late December.

Trey Ware:                         He’s the man. Karl Eggerss, EggerssCapital.com. Check him out EggerssCapital.com. Thank you Karl. We’ll visit next week.

Direct link: http://traffic.libsyn.com/keggerss/KarlE_TreyW_KTSA_012118.mp3

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