Caution tinged with optimism. That appears to be the general feeling about the global economy and crypto markets at the start of 2019.

Following a rather turbulent end to 2018, when most major stock markets slid into the red for the year, the relative market calm of 2019 makes for quite a difference. The fall in crypto markets in 2018, too, felt relentless and many commentators sharpened their quills once more to write Bitcoin’s obituary. The currency has, seemingly, been on its deathbed since the day it was founded.

Crypto-currencies

Coupled with the relative recovery in stock markets, crypto-currencies appear to be recovering from their own mini-slumps in January. This followed December’s seemingly nostalgic upswing — except there was no repeat of 2017.

The UK & Europe

The UK continues to grapple with BREXIT. With no deal having yet been agreed ahead of the 29 March deadline, current industry data points to a slowdown in investment. Indeed, in recent weeks, both Honda and Ford have announced plant closures and job cuts — although these have been blamed on a global restructuring — and the major banking groups have set aside hundreds of millions of pounds in provisions to help manage any BREXIT fall-out. The Bank of England (the UK’s central bank) has forecast the worst annual growth, at 1.2%, since the beginnings of the financial crisis in 2009. In spite of all the uncertainty and in the face of these external challenges the UK economy still has one of the highest growth forecasts in the OECD this year. Additionally, unemployment has fallen to 4% — levels not seen since the 1970’s.

The US

For now, the US-China trade war continues to dominate US economics. The deadline for a deal to be agreed has been extended beyond the 1st of March; if no agreement is reached President Trump has threatened to impose tariffs on a further US$200bn of goods from China. This would be in addition to the tariffs already imposed on US$250bn of Chinese goods. This has led to some considerable diplomatic activity in recent weeks, causing The President to soften his position a little, and leading to an extension in the 1st March deadline. In recent weeks, Markets had already appeared to take the view that the 1st March deadline was no longer set in stone, with very little activity being linked to this.

China

China’s economy is grappling with two major headwinds. The first is that Chinese economic growth is slowing down. The Chinese government is trying to make this a managed slowdown, as far as is reasonably possible. Growth in 2018 was 6.6%; the slowest rate since 1990 but still in line with forecasts. The second is the US-China trade war, as noted above. A further increase in tariffs has the potential to put a further dent in Chinese economic growth.

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