Stocks broke down Friday as global growth fears increased an the Federal Reserve took a more cautious stance saying that there will be fewer hikes in 2019 and 2020. This comes on the back of increased fear of slower growth in China and Europe.
We at Classiarius have been writing about the expected slowdown in US, China and Japan since October 2019 – we strongly feel that the China slowdown can be shockingly fast. So the news on Friday that pointed to a slowdown in the global economy was no surprise but it did in fact force the Dow Jones Industrial Average to fall 460.19 points.
Bank stocks were sold off aggressively as the sharp pullback in long-term Treasury yields took hold. Sending bank stocks lower was an inversion of the yield curve.
The banks performed poorly on Friday with Moran Stanley and Bank of America down at least 2.9 percent, and Citigroup falling 4 percent. Most other major banks fell 3.0 percent or more.
The US central bank announcement of slower growth has shocked markets and the view that GDP will slow in China the US, Japan and Europe is of course a reality that equity markets must deal with now.
Our biggest concern here at Classiarius is in China. The China economy is in a weakened state and the US China trade talks are coming up with some concern about the 25 percent tariffs placed on the Middle Kingdom as well as the focus on China imports of agricultural products.