– The trade war between China and the United States continues to put pressure on the world, and Donald Trump will continue to turn to the Fed, demanding, uh, to cut interest rates, to support the economy as he seeks re-election. These tensions are joined by fears after the British exit from the European Union and the efforts of the European Central Bank to revive the euro zone. As for oil prices, they are at risk of collapse, unless cooperation continues between Russia and OPEC to control production. Meanwhile, the struggle between Netflix, Disney and Apple is increasing in the entertainment world. Here is the most important thing for the financial markets in 2020.
1. No end to the supremacy struggle between the United States and China:
The trade war has hit global markets and the economy during 2019, and this will continue in 2020 as well.
The International Monetary Fund estimates that the global economy will lose $ 700 billion of its value, due to the tariffs that the two countries imposed on each other, and the uncertainty created by the conflict. That value equals 0.8% of GDP.
The results may be less extreme, given the progress made by the parties last December, when China agreed to increase purchases of US agricultural products, in exchange for the partial abolition of US tariffs. There is no scheduled date for signing the agreement, and neither side has announced an initial draft, but last week’s tariff cuts by the Chinese government seem designed to calm and pave the way for signing in January.
However, even after this, definitions still exist between terminals. Difficult problems continue to arise such as: intellectual property rights, incentives provided by the Chinese government to companies, and a possible return to square one, while the two sides fight over issues: Hong Kong, South Korea, and Taiwan, and they can begin to harm each other.
This is real when looking at the Democratic Party’s pledges, their position on trade issues, human rights, and technological excellence, which shows that whoever wins the presidential race next year, will pursue the trade war with China.
2. Elections and the Fed
The US presidential elections come in November of next year, and cast a strong shadow over the previous months, and the darkness of those shadows will cover the Federal Reserve with others.
And if Trump reaps from the attempt to isolate, we see that opinion polls put his victory at 50%, and this paves the way for another four years, in which the markets are affected by the developments of trade war and monetary policy, with the Federal Reserve reducing interest rates in attempts by it to contain any shocks, whether shocks Push up or down.
From the Investing.com Federal Reserve Watch, expectations are for the interest rate to remain between 1.50% to 1.75%. However, this depends heavily on the policy options that Trump makes between our time and November.
If Trump chooses to avoid a trade war, then the inflation rate will likely rise due to the impact of the strong labor market and the $ 1.2 trillion budget deficit. The pressure will increase to raise US interest rates, which will affect the bond market, but Trump’s love for the wars on Twitter will deter the Fed from raising interest rates, because the Fed has political power during the election year.
And if Trump were to direct his weapon crater to: China, the European Union, Mexico, Canada and others, then the Fed might be pushing for a rate cut.
Investing.com’s Federal Watch sees a drop of 25 points during the second half of 2020.
3. Entertainment broadcast wars
Forget Star Wars (Star Wars) this year will be entertainment broadcast wars.
(NASDAQ: Netflix) this year is trying to defend its superior position (as the number of subscribers reached just under 160 million subscribers around the world) is the first, and the first thing that comes to mind when talking about broadcasting.
But this advanced position is under the threat of major competitors, with huge financial liquidity, such as: Apple (NASDAQ: AAPL), and Disney, and we launched their services last November. Nobody can rival the Walt Disney Company (NYSE: DIS) in dominating sports programs, and they will be among the toughest competitors. Its CEO, Bob Eger, says he targets 90 million subscribers in 2024. He records the first 10 million of them on the first day of service launch.
It will enter the circuit next year: Comcast, AT&T: with NBC Universal released in April, and Warner Media HBO Max released in May. Amazon.com remains a strong competitor, standing on the sidelines, with the ability to crush any other competitor.
Good news here: Analysts see good market growth for many suppliers. The less shining news is: No one knows how far the price will go down. Disney had to offer a much lower price than Netflix. Hence, those who come after them may face some difficulty in setting appropriate pricing.
And those companies lining up to offer competitive content services like Rocco specialize in smart TVs designed specifically for broadcast platforms. After reaching four times its forecast for 2019, stocks are trading 15.2 times higher than expected return in 2019. This may be the hardest thing for the sector to experience in 2020.
4.Oil and fresh stock
Financial markets face difficulty in the beginning of 2020, with global growth slowing, which ensures continued growth in demand for oil.
OPEC agreed with the allies, led by Russia, to cut production by 2.1 million barrels per day, until March of next year, which reassured the markets of the threat of oversupply. The International Energy Agency said that global oil stocks will grow by 700,000 barrels per day during the first quarter of the year.
“The OPEC cuts have not completely solved the problem,” says head of oil market research from Rustad Energy.