FOMC, Investments, Trading

2019 : Where are we heading? The writing is on the wall

January 10, 2019

While we bid goodbye to 2018, we entered 2019 with a bang. FX Markets started 2019 with episodes of dislocations in Japanese Yen and its crosses. Stock markets were rattled on the third day of the new year, when Apple stock price suffered a record 6 years massive loss of 10% after sending a warning on its revenue guidance. US long term yields began the new year and continued its slide despite FOMC hiking three times in the previous year of 2018 that saw Fed Funds Rates ending at 2.00 to 2.25%.

What are we expecting in 2019? Will the US-China trade war continue? Will Fed’s Powell continue to hike and incur the wrath of President Trump? Will the fallout from Brexit be a mess to UK and Euro?

The writing is on the wall.

Many will have very different opinions from mine. Some might even find it distasteful, but I will continue to express my honest opinions. While we might have differing views, in my opinion, it is undeniable that the world seems to be revolving around one person - the President of the United States, Mr Donald Trump. [Trivial: He was the runner up in Times Magazine’s 2018  Person of the Year, the renown and coveted spot on its annual cover page.]

No matter where you go, how hard you try, Mr President Trump has a role to play in most of the headlines that you read - whether directly or indirectly.

From his furious exchange of tweets with North Korea’s leader Kim Jong Un (aka Rocketman) on whose buttons were bigger and whose nuclear arsenal was more powerful and in working condition, to his waves of digital threats and endless tirade against nations and economies who are seemingly always taking advantage of America and ripping her people, he is always there in the headlines and in the limelight.

We knew how the North Korean missile threats rocked the markets, and subsequently we witnessed how the Trump-Kim June summit in Singapore gave the markets the much needed rocket boost. When Trump threatened tariffs and vowed no concessions to Turkey’s hard stance on numerous issues from the detention of American Pastor to Syria, Turkish Lira crashed (almost 50%) to the American Greenback. The Lira recovered some of its losses thereafter, however we have once again witnessed the might or damage of a Trump tirade!

China had its fair share of attention and torrid time from Trump. In the year before 2018, Trump and Xi, along with their First Ladies, appeared to be enjoying each other’s company and one could be forgiven if he/she thought US China relationship would have gone off the records from then on.

How wrong we were!

At every opportunity, Trump lashed out at China and Xi, along with billions of tariffs and protectionist stance against the oriental economic giant. Xi silently and resolutely stood against Trump and his tirades, refusing to budge nor acquiesce. Chinese Renminbi took a hit, stock markets fell, and everything else that had a link or two with China came tumbling down. It felt like watching Humpty Dumpty being played out on the global screen. Once again Sir Isaac Newton’s universal law was proven right, the Apple fell. The stellar tech stock came crashing down from its stratospheric heights.

It is not only foreign nations and economies who incurred his wrath and displeasure. Even those closest to him, and those who are serving  and protecting American interests. Ask Fed’s Chairman, Mr Jerome Powell who seemed to do no wrong during his 2017 inauguration when he was introduced by Mr Donald Trump. Fast forward to 2018, when the Fed decided to hike thrice, he became a lightning rod to President Trump’s Mach speed Twitter strikes. His gut tells him that the Fed are not being accommodating and he feels like firing somebody. Stop messing with the 50 Bs!

Where do all these lead us in 2019?

The writing is on the wall. What will happen with his tough stance of shut down America with his rivals at home?

Wither him or the wall?

The numbers are out, the US continues to chalk its deficit as I write. It is of paramount importance, especially crucial, that they continue their act together - if not, the house of cards will fall apart, and everything else will come tumbling down together.

So watch him, President Donald Trump - my Person of the Year in 2018 and some say even 2019.

Good Luck, my fellow Treasurers and navigators of the seas!

about author

Seng Ti is currently heading a Treasury & Finance team in a MNC and is serving as the President of the Association of Corporate Treasury (Singapore) aka ACTS. He enjoys reading and discussing about current affairs, politics, life, wine and lives a normal life with his wife and 2 young kids.