An endless stream of positive and confident gait States S & P 500 led investors to abandon the idea of reducing the divergence in the economic growth of the United States and the euro zone and dropped quotation EUR / USD below the base of the 10th figure. Following the strong data on business activity in the manufacturing sector and industrial new orders pleased with the purchasing managers index in the services sector, employment in the private sector and the trade balance. US stock indexes updated historical highs, and the statement of President of FRB Mary Daly that boil in the stock market reflects optimism about the economic outlook, added fuel to the fire.
The growth of the January employment in the private sector from ADP almost twice exceeded Reuters forecasts of experts. Figure increased by 291 thousand, which is the best dynamics in May 2015. Most of the jobs (237 thousand) generated the service sector, which, coupled with the acceleration of business activity in the non-manufacturing sector from 54.9 to 55.5 indicates a potential improvement in domestic demand . Let me remind you, the slow growth in consumer spending is not allowed to grow after the dollar in the light of data on GDP for the fourth quarter.
The dynamics of business activity in the non-manufacturing sector of the US from the ISM
Pleased and the US trade balance, the deficit is at the end of 2019 for the first time over the last 6 years has narrowed. . At this time by 1.7% to $ 616.7 billion Imports fell 2.4% to $ 865.9 billion, export -. 4% to $ 249.3 billion trade deficit with China decreased by 17.6% to $ 345.6 billion. It seems that protectionism Donald Trump gives the result. So much the worse for the euro. The US trade deficit with the EU widened to a record $ 177.9 billion, which increases the risks of a new trade war which, for sure, will bring the pain already sluggish eurozone economy.
The dynamics of the US trade deficit
Source: Wall Street Journal.
Strong statistics across the United States, Beijing's statement on the reduction of tariffs on US imports of certain categories of goods from 10% to 5% and from 5% to 2.5%, as well as information that is found in China, a vaccine against the coronavirus, and in Britain scientists made a significant breakthrough in the search for medicines closer quotation EUR / USD to important support at 1,0980-1,0985, which break will increase the risks of continuing to peak 1,0905-1,0915, and at the same time allowed the S & P 500 to rewrite the historical highs. According to the president of the Federal Reserve Bank of San Francisco Mary Daly, confident tread of the US stock market has been made possible thanks to the Fed's timely actions to reduce the federal funds rate. This way the central bank to protect the economy from the negative effects of internal and external factors.
It seems that love for the "bulls" of stock indices is present not only at Donald Trump, who seriously considers rising stock market result of its activities. It is interesting that about 84% of the equity securities owned by the wealthiest 10% of American households, so that the rally S & P 500 makes the rich richer, while the rest of the US population does not draw from it almost useless.
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