We have prepared for you a selection of the expected events that will impact financial markets in 2020. The year promises to be exciting, as continued economic and trade conflict between Washington and Beijing will continue to adjust the world economy, and the US President Donald trump would build on the fed to support the economy ahead of presidential elections. At the same time, the acute problem of relations with great Britain after a Brexit would undermine the efforts of the ECB to revive the Eurozone. If OPEC+ will put more efforts to limit production, oil prices will drop significantly. At the same time Netflix will lead a strong fight with Disney, Apple, and others for positions in the market of streaming services.
1. Trade and economic conflict between the United States and China
In 2019, the struggle between Washington and Beijing caused considerable damage to the global economy, such as the consequences of waiting for the experts and in 2020. The international monetary Fund calculated that the duty imposed by both parties, and the resulting uncertainty will reduce the value of the global economy for 700 billion USD next year, which is equivalent to 0.8% of the world GDP.
For the duration of the conflict indicates the position of the radical Democratic party, which aimed at an explicit confrontation with China on issues from trade to human rights and technological superiority.
2. Elections in the United States to win Donald trump
Based on recent opinion polls, in the presidential elections, the United States once again to win Donald trump, assuming he survives the current impeachment process. If trump will remain, trade and tax policy will be the main factors of market development, and the role the Federal reserve will be reduced to mitigate possible shocks, whether in the direction of increase or decrease generated by this policy. According to the monitoring tool rates the fed target range of the key rate in 2020 will not change and will amount to 1,50% - 1,75%.
With the policy of escalating trade wars, inflation will increase under the influence of a strong labour market and the budget deficit in the amount of 1.2 trillion USD, which will lead to the fact that the pressure on interest rates will start long positions in the bond market, and short positions will be held at the new frightening message of the President on Twitter.
3. A tough battle between streaming services
At the moment Netflix has a little less than 160 million subscribers worldwide, and is the first name that comes to mind when talking about streaming video. But in the new 2020 the fame of the company can falter, so as to market a new streaming products from Apple and Walt Disney.
As for technologies, the developers of Disney ahead of Netflix, giving users unmatched catalog and dominance in live broadcasts of sports programs. Comcast and AT & T enter the fray next year: Peacock from NBCUniversal will appear in April, and HBO Max WarnerMedia in may. As in many other sectors Amazon.com will be a potentially powerful competitor.
4. Oversupply of oil
Due to the reduction in the growth rate of the economy, the offer of oil is increasing faster than demand. It was stated earlier that the OPEC agreement regarding the reduction of supply by another 500 thousand barrels per day from January to March had convinced traders that the immediate saturation will not, however, the International energy Agency (IEA) said that global stockpiles may increase to 700 thousand barrels per day in the first quarter.
Based on past performance, next year the growth in US production will slow to about 900 thousand barrels per day. For the first time in three years the United States will not be able to fully satisfy growing global demand. According to estimates of IEA, in 2020 the world demand for oil will grow at an average 1 million barrels a day.
5. With the trade in the European Union
Trade goods Europe moves from year to year, and the detours are still scarce. Fee increase U.S. exports to China have caused a negative impact on exports of capital goods in the Eurozone. Also, take into account the exit of Britain from EU, most likely, this event will lead to feverish negotiations. Thus, there is a possibility of a phased negotiating trade agreements, sufficient to alleviate the violations of trade and financial flows between EU countries. Such a scenario will constantly undermine confidence and demand, and the pound will try to keep growth in the last quarter.