Stocks opened the trading week lower thanks to disappointing earnings from Cat. At the close the Dow was off 208 points to 24,529. Trading volume was mixed. IBD still has markets in rally mode.
In the global arena there is never a dull moment and several things happened in last week that could be significant. An economic slowdown in China appears to be gaining steam as evidenced by the following headlines from The South China Morning Post. 1) Smartphone shipments fall to pre-2014 levels as slowdown bites. 2) Guangdong slashes growth target for 2019 and 3) China’s industrial profits fall for second month in a row. These headlines give a hint of the struggles going on in China. Adding to these items, global attitudes toward China also appear to be shifting. The most significant event last week was a speech by Hedge Fund guru George Soros at the WEC in Davos. Switzerland. Soros, after years of supporting China, has done a 180 and slammed China for its BRI debt imperialism, increasing authoritarianism, piracy and persecution of minority groups. Soros praised the US for identifying China as a “strategic rival”. The speech was almost a call to arms and apparently sent shivers through the well-heeled crowd many of whom have assets in China and are worried. People who attended the speech said George laid out what was on everyone’s minds. This trend bears watching as the age of disruption rolls on.
Alaska Airlines beat earnings estimates last week and announced a $120 million bonus to employees. The company said 2018 was a year of transition which saw a “stunning” turnaround at Horizon Air plus the completion of its integration of Virgin American airlines. The bonus was paid last Friday and amounted to roughly 6.5% of each person’s salary.