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  • The Federal Reserve hiked short term rates at their last meeting on December 19th and since then they have been at pains to express their concern with regards recent equity market volatility that some have attributed to their previous hawkish declarations. Future interest rate policy in the US will be one of the primary drivers of asset market returns for 2019. (See chart of Fed Funds Rate) 
  • US employment data continues to point to a strong underlying economy. Whilst jobs data is viewed by some as a lagging indicator, a third consecutive monthly reading of wage inflation +3% year on year points to a consumer that should be feeling pretty good about themselves.
  • In conjunction with Fed policy and equity market volatility, Trade War concerns have also been at the forefront of investors and consumers thoughts over the festive period. Talks have begun this week between Chinese and US representatives with initial positive soundings been expressed by both sides that an amicable solution will be found in the near future. Will the process to an agreement be similar to that of NAFTA 2.0?
  • With some flagging economic releases from the Chinese economy, authorities’ have provided a stimulus of circa $120bn via a cut in the reserve requirement ratio. We continue to believe that the communist party will enact policies that will maintain GDP growth levels of c. 6%+. However, in time it may not be the absolute levels of growth but the quality of this growth that will be of more significance to investors.