The U.S. equity markets are trading sharply lower on the first trading day of 2019 on fears of a slowing global economy, driven by weak manufacturing data out of China and several other countries in Asia. In fact, China’s Markit Manufacturing Purchasing Managers’ Index (PMI) for December showed a 49.7 number, representing a contractionary reading for the first time in 19 months.
But what is bad news out of China could actually turn out to be good news if you stay focused on the bigger picture. Although additional economic pressure on the country represents confirmation of the global slowdown the stock market fretted about last month, it also applies more pressure on the Chinese regime to resolve the current trade dispute with the U.S. to spur economic activity. It may force the Chinese to make a deal within the 90-day negation window, or else risk additional weak data points and readings. Why trade is so key, especially early in the year, is because a deal represents one of the largest potential catalysts for the stock market in 2019. So what appears to be bad news at its face value may not be the case down the road. (Clink Here)