Quora Answer: Since the Stock Market Has been Erratic as of December, 2018, Where Do You Think It is Headed for the Year 2019?

The following is my answer to a Quora question: “The stock market has been very erratic as of December 2018.  Where do you think it is headed for the year 2019?”

The period between July to mid-December 2018 was a difficult time precisely because of the trade dispute between Trump’s America and China.  Prior to that, we had two years of spectacular performances in the market, 2017 and 2017.  2018 was projected to be a continuation of the same, but Donald John Trump happened.

The market has since rebounded in January 2019.  Whilst it has been erratic, the trend is still towards growth.  We will see some adjustment in the market before it slows next year.  All this is if all things continuing as they are.  The market is jittery because the President of the world’s largest economy cannot decide what he wants, and his administration changes policy like a two-year-old deciding between different coloured soft toys.  There is no discernible long-term plan.  The general idea we have is towards US protectionism, but the US economy is not geared towards that, when it has outsourced much of that manufacturing capacity, and it has no monopoly on any of the commodities market.

India’s economic policy is rubbish.  You cannot run monetary policy on a vendetta against Congress.  It creates uncertainty in the market.  India did very well in the last half of 2018 because investors fleeing China counters needed a place to park their funds, not that India is inherently attractive.

China has to address a slowing economy.  The OBOR is a means to export some of their problems, and accrued debt.  China’s borrowing, including through proxy entities, is quite alarming.  That debt bomb is a concern.

And then, there is Brexit, which will mean administrative chaos in the EU simply because the UK government has allowed nationalism to dictate economic policy.  I see a contraction in the UK economy, and that might have a knock-on effect on the EU due to structural issues with the major EU economies, Germany, and France.