New Year, New Growth
Stop me if you’ve heard this one before: We have a trade deal with China!
No, really. A phase one trade deal between the U.S. and China was “officially” announced at the end of last week.
I can’t blame you for being skeptical, because we’ve all heard that one before.
And the details of this “deal” are sketchy at best. We haven’t even seen anything in writing yet.
But the market went ahead to celebrate the deal last week with new record highs in the S&P 500 Index as if the deal is actually for real this time.
It’s been a quick ride since this all started…
You might remember in 2018 global trade plunged in the wake of the trade war, with U.S. exports to China down 15.5% year over year, while Chinese imports to America have fallen 13.5%.
But recently, perhaps in anticipation of a trade deal getting done, export orders have picked up again, along with the global manufacturing and service sectors.
In the chart above, you can clearly see an upturn in worldwide manufacturing output, business activity in the service sector and even export orders have picked up according to recent data. Call it “green shoots” heralding an upturn in global growth in 2020.
In fact, November’s jump in manufacturing activity was the fastest expansion in all of 2019.
With a reading of 51.5, the JPMorgan Global PMI rose to a four-month high. The global factory output index jumped for the fourth-straight month in November to reach the highest level this year, while the service sector of the global economy also expanded at a faster clip…
What’s more, it is the emerging-market economies that appear to have turned the corner quicker than developed markets like the U.S. and Europe, as you can see above.
It’s no wonder why the MSCI Emerging Markets Index ETF (EEM) is up nearly 15% since early August.
And if the trend toward faster global growth and rebounding global trade accelerates in 2020, emerging-market stocks may prove to be a much better bet than U.S. stocks.
Chief Income Expert, Mike Burnick’s Wealth Watch