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January 9th News Summary

Summary

The brief trade talks concluded. China issued positive statements. But the tone from the US is more mixed.

Oil is sent higher due to multiple reasons.

Fed's December meeting minutes confirmed the rate hikes control.

China and the United States have concluded the three-day trade talk and will hold a press conference on Thursday morning in Beijing time. The US is going to ‘plans next steps’. Analysts are taking this as a positive sign. US stocks continued the hot performance of the Asian-European market and the possible good news of the trade war. They opened higher again in the morning, and the stocks sensitive to Sino-US trade, such as Boeing (NYSE: BA), rose again, and the chip sector also recovered. Saudi Arabia’s statement of continued production cuts prompted WTI to rise 5.12% today, surpassing $52, up $10 from Christmas 2018, and oil companies such as Exxon Mobil Corp (NYSE: XOM) and Schlumberger NV (N: SLB) rose 0.5% and 1.4% respectively. The Federal Reserve announced the minutes of the December meeting, once again let the market determine the attitude of the central bank to control interest rate hikes. The three major stock indexes closed higher today.

Looking at to Canada, although the possibility of a rate hike by the Bank of Canada in January was very large, it was affected by the global stock market and oil price plunging, and the slowdown in Canada’s domestic inflation and the weaker-than-expected real estate market. This morning, the Bank of Canada announced that it is maintaining the 1.75% overnight rate unchanged.

China’s CPI data missed economists’ forecast., it rose 1.9 percent, below the 2.1 % growth expectations. Producer inflation is also significantly below the expectation. Shanghai Index opened lower but jumped later on as the Chinese Ministry of Commerce made a positive statement about the trade.

My Take:

The market is paying most of the attention to the talk and interest rates. Analysts are looking for single-digit earnings growth. I do believe it is achievable. It seems like the government shutdown does not matter. However, the border security talks between two parties obviously did not go well. Trump walked out of the meeting room and called it ‘a waste of time’. Democrats leader thought it is ‘Unfortunate’. The effect may come into play when the market opens tomorrow. Besides, the statement from the US about the trade talk is not all positive.