Does the capex spending during 2019 decreased, or the decrease is limited to machinery and durable goods? Is it about time we focus on different metrics that are not in the spotlight? US is experiencing full employment and the Central Banks have the capacity to offer the necessary liquidity. Is there a way to focus on the residual and discount the significance of labor market and capital market metrics?

The taxi-drivers of global trade, are ordering for new taxis. The FED proves its ability to respond decisively and promptly to the 18 September repo rate spike. Central Banks are increasing their balance sheet again. During 2019, a publication was claiming that the r* is negative. The global slowdown with lower interest rates, does not sound alarming.

Since the beginning of 2018, I was wrong to expect that inflation will increase out of control. Such a scenario is not happening any time soon. Online market places intensify global competition, and keep prices low for good.

What next:

• UK: Disappointing macro releases and wishful consecutive new deals.
• USA: Presidential elections while President Trump is officially impeached by the House , and most probably saved by the Senate.
• Germany: New leaders of the SPD could push for the much needed fiscal spending
• France: 2019 ends in a similar way as 2018. On 2018 the Yellow Vests movement was triggered by a new tax on oil. Now, France is on strike against the proposed pension plan reforms.
• Italy: Italy is heading to regional elections on the 26^th of January. Next general elections are scheduled in 3 years from now.
• US and China: A new modus operandi has been expected since May 2019. A very limited part of tariffs have been waved on December 2019. Phase 2 deal is expected after the November 2020 presidential elections.
• Central Banks in 2020: FED could declare that it is aiming 2% symmetric inflation target throughout the whole business cycle. ECB is having it’s Strategic Review and could include full employment target into its mandate. BOJ is continuing its aggressive monetary expansion up until it succeeds the 2% inflation target. BOE is in a wait and see mode.
• US-EU: the probability of additional tariffs on EU goods exists.
• Cryptos: Total market cap at $194bn ( +46% ytd, -45% from the 2019 high, -76% from the all time high of January 2018).

Next week:

• Focus on Turkey’s and North Korea’s actions
• Enjoy New Year’s Eve!