Week In Review 12.14.2018

Markets ended the week lower, driven by continuing concerns about trade and global growth. Political uncertainty surrounding Brexit, and the potential for a U.S. government shutdown also weighed on markets. Investors were also looking ahead to the Fed’s December 18th and 19th meetings, at which time the Fed is expected to raise rates again by 0.25%.

Unlike other recent weeks, news regarding trade negotiations with China was largely positive with several reports suggesting that China is considering lowering auto tariffs, resuming purchases of U.S. soybeans, and easing its “Made in China 2025” program to allow more foreign competition. However, markets remained skeptical about the veracity of the reports given the difficulty in confirming specific details.

In the U.K., PM May survived a no-confidence vote, but the very fact the vote was held illustrates how tenuous her grasp on power remains. After canceling a Parliamentary vote on her Brexit plan at the start of the week, due to the likelihood of it failing, the next steps in the process remain uncertain. What is certain is that Parliament must approve a plan soon to avoid a “hard” Brexit.

In the U.S., concerns about a government shutdown were elevated after a contentious meeting between the President and Democratic leaders in which the President pledged to shut down the government, if necessary, over funding for border security.  Government funding is currently set to expire at the end of Friday. Should a shutdown occur, nearly a quarter of the government would be affected including the departments of the Interior, Agriculture, State, Treasury, Commerce, EPA, and Homeland Security. Unaffected would be the Pentagon, Veterans Affairs and the Health and Human Services Department.