China Trade Negotiations Continue While Second Tier Economic Data Slightly Softens

Feb 22, 2019 | Nick Scholte


"Softening" economic conditions are consistent with RBC expectations of a slowdown in economic growth, not a reversal

To my clients:

It was an up week for North American stock markets with the Canadian TSX rising 1.1%; the U.S. Dow Jones Index rising 0.6% ; and the U.S. S&P 500 rising 0.6%.

On the U.S./China trade front, there were more face to face meetings in Washington this week, with President Trump meeting with Vice Premier Liu He as I type. Liu He is one of four Chinese vice premiers, and has been designated President Xi’s “special envoy”, suggesting he has greater authority to make compromises leading to a deal. Media reports are optimistic that this is a sign of sufficient progress. According to Bloomberg, there are whispers that officials are working on memorandums of understanding involving agriculture, non-tariff barriers, services, technology transfer, and intellectual property, as a basis for the eventual deal.

Without going into details - since the economic reports I’m about to reference are mostly second tier - economic data this week softened somewhat. However, consistent with my late 2018 messaging during the depths of the market correction, the softening seen this week is indicative of a slowdown in economic growth, NOT a reversal. Again, RBC is forecasting 2019 GDP growth of around 2.5%... higher than the post 2008 average (just slower than the “jet fuelled” growth rate of 2018 with jet fuel = corporate tax cuts).

That’s it for this week. All the best,


Nick Scholte, CIM, FCSI

Vice-President & Portfolio Manager
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
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