— This is the script of CNBC's news report for China's CCTV on August 13, 2019, Tuesday.
US stock market is experiencing a hard time recently, closing down overnight, at the closing session, Dow lost 390 points. We can analyze its reasons from 3 aspects, on the economy data front, according to data released that day, government's fiscal deficit expanded 27% in July.
Till the end of Sep, US fiscal deficit may rise to 1trillion dollars, if that still goes in current fashion. On the other hand, latest political volatility in Argentina and Italy also worried investors, curbing risk appetite across the financial markets.
Capital floods into gold and bond markets, which are relatively safe, taking some money off the stock market.
Concerns about the serious trade situation and economy recession dominate sentiment at Wall Street. Especially the date, Sep 1, is coming soon, so more are more potential influences are emerging.
Now, there are 4 investment banks have shown their worries and released warnings. Among them, Goldman Sachs lowered its economy growth expectation of the 4th quarter, saying the major reason to do that is because influence of trade war is growing; Morgan Stanley warned that "The bear is alive", thinking last week's rebound is just a temporary one that happens in a bear period and Morgan forecasts that the Fed is probably to cut rates again on the meeting held in Sep and Oct, that is generally in line with UBS's forecast. UBS thinks that a new round of tariffs would drag down the economy growth, so the fed is going to cut rates. Additionally, Bank of America also believes that many indicators of America economy now is with yellow alarm, next year, there is a 30% probability that the US economy is in recession. In terms of stock market performance, no good news is possible to emerge to support a strong stock market. We may see that the US stock market stays at low levels for some time.
Now, the expectation of the markets falls on US trade policy and how the fed will react to that. The White House has told the fed that they look forward to seeing a rate cuts by 100 basis points.
The fed's next rate-setting decision is not due until September 18th, before that, the central bank governors' meeting held in the next week will be the focus of the market, at that time, news about monetary policy stance is probably to offer hints to the stock market.