Dollar In Charge 👊 Germany Flirts With Recession 😣

by | 14 Feb, 2019

1. Dollar In Charge 

Yesterday’s Consumer Price Index data gave investors a juicy topside surprise with headline inflation softening less than expected to 1.6% while core inflation remained unchanged at 2.2%. So what does this all mean?

It means that things aren’t as bad in the US as the doomsday enthusiasts may have you believe. The fundamental mechanics of the economy are strong and we’re seeing risk-on sentiment showing up in the fixed income, equity and currency markets.

The Dollar index has gained 2% since the start of February to revisit its December highs, boosted by a sagging Euro and loosening global rates, while bond yields and equity prices have ticked up in response to perceivably positive developments in the US-China trade war. However, bullish conditions in the US may spell doom for global markets, should the need for more rate hikes re-emerge.

With many countries opting to soften their monetary policy outlooks for 2019, and the spectre of weaker global growth weighing on European and emerging markets, a US rate hike could be a debilitating factor for growth.

While the 2.2% core inflation rate is outside the Fed’s target range, Jerome Powell will need to think carefully about the ramifications of a shift away from its neutral policy and a rapidly strengthening Dollar. But for now the flexible approach seems to be paying dividends for the US, and investors are piling in. Long may it last!

2. Germany Flirts With Recession

It’s no secret that European powerhouse, Germany, stagnated in 2018, flirting very closely with recessionary territory. And it would seem that it may not have bucked the downtrend just yet either.

A slew of poor data and outlook downgrades have weighed heavily on the Eurozone area, owing to trade war pressures, Brexit, rising populism and political disruptions within the EU. This all adds up to make a concoction powerful enough to stagnate one of the strongest manufacturing nations on the planet. Scary stuff.

Germany’s roughly 14% decline over a 52 week period has highlighted its overexposure to an export-led growth model weighted heavily in its automotive and manufacturing industries which have been hit internally by rising emissions standards and externally by global and regional issues. The feared double-whammy!

While the general consensus is that the downturn is temporary, a turnaround would depend largely on the stabilisation of the many disruptive factors facing the country, and the emergence of no new problems. This may be a tall order considering the potential impact of a no-deal Brexit and growing unrest in France and Italy.

Let’s hope for Europe’s sake that some stability can return in the near-term and the Germans continue to ward off the recessionary demons!

 

Today we are watching…

1. Canada Goose (#goos)

Canada Goose has taken flight since the start of 2019, skyrocketing roughly 40% in the space of two months. In-store expansions, wholesale business improvements and targeted buyouts of design and manufacturing company, Baffin, has put the company on a solid grounding for 2019. However, rising expenditures have made analysts unsure as to whether the recent run of form will maintain its current momentum. The consensus EPS estimate is $0.60 (+3.4%) on revenue of $266.39 million (0.2%).

2. Nvidia (#nvidia)

The much-anticipated earnings announcement for Nvidia is finally here after a rough few months of vicious short-selling and volatility. Having downgraded its guidance thanks to deteriorating conditions in China and weaker demand for GPUs, gaming and data centre spaces, investors are not expecting good things from Nvidia today. However, better than a better than expected outcome may spur some serious upside momentum – sellers be warned! The consensus EPS estimate is $0.63 (-63.4%) on revenue of $2.25bn (-22.7%).

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:

Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.

Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

Brokerage services of US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth, LLC a registered broker-dealer and member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. 

DriveWealth provides no tax, legal, or investment advice of any kind, nor does DriveWealth give advice or offer opinions with respect to the nature, potential value, or suitability of any securities transaction or investment strategy. DriveWealth acts as the clearing firm for securities transactions entered on the Invstr mobile platform. DriveWealth is not affiliated with Invstr. Invstr does not participate in DriveWealth’s decision-making.

There is no minimum initial deposit required to open an investing account with DriveWealth. Expenses and Fees associated with the DriveWealth platform in conjunction with Beanstox includes either a monthly membership fee of $4.99 with a commission charge of $0.01 per share* or, in the event the membership fee is not paid, a commission charge of $0.0125 per share applies, subject to a minimum of $2.99 per transaction. There are no monthly minimum fees, or required ongoing minimum account balance. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost). View a full list of our fees at http://bit.ly/DWFees

The monthly subscription charge is four dollars and ninety-nine cents (US$4.99) per month plus one cent (US$0.01) per share traded (as examples, for a Transaction of 0.90 shares, the per share traded charge is one cent (US$0.01), and for a Transaction of 1.6 shares, the per share traded charge would be two cents ($0.02), and the quarterly subscription charge is fourteen dollars and ninety-nine cents (US$14.97) every 3 months plus one cent (US$0.01) per share traded. The monthly and quarterly subscription charges may be greater or less depending on additional services offered by a DriveWealth partners as part of the subscription model offering, or based on any subsidies provided by a DriveWealth partner as part of the subscription model offering. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost).View a full list of our fees at http://bit.ly/DWFees

This communication is not an offer or solicitation to purchase or sell securities. Investing in securities carries risk, including the loss of principal. Past performance is not indicative of future returns, which may vary. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country's currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises. Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. ETF prospectuses are accessible within the mobile application via a link under each company’s “Description.”

A fractional share is a share of equity ownership that is less than one full share. Fractional share investing has certain limitations and restrictions that investors should understand prior to purchasing fractional shares: ownership of less than one full share does not give the fractional share owner the right to vote on company matters; fractional shares are non-transferrable, meaning they cannot be transferred to another brokerage firm; and fractional share orders will be accepted as market orders only. For more information and details on fractional shares, and any associated limitations or restrictions please visit: https://drivewealth.com/fractional-shares-disclosure

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