Market Fruitcake of the Day

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Karyn Cavanaugh, senior market strategist at Voya Investment Management, on 'Squawk Box'

Today’s market equivalent of a fruitcake is the latest China data. Both retail sales and industrial production were a disappointment. China’s industrial production was up 5.4% in November year-over-year and retail sales increased 8.1% YoY, but these figures point to a continuing slowdown in China’s economy. Although the United States is bigger than China, China accounts for twice as much global growth. On a positive note, the decelerating data could result in additional Chinese economic stimulus, which has already been working through the China economy and sets up the possibility of a boost in global growth in 2019.

Meanwhile, today’s U.S. consumer data were candy canes. Retail sales were stronger than expected, up 0.5% excluding gasoline in November; October sales were revised up to 1.1% from 0.8%. This indicates that fourth quarter GDP growth may be stronger than anticipated. U.S. industrial production was also upward, increasing by 0.6%, though this was primarily in utilities and mining. Manufacturing output was a little weak, reflecting the slower global growth, trade uncertainty and a strong U.S. dollar. Investors seem to be focusing more on the fruitcake than the candy canes: what has been a positive week for markets may end with a fruitcake thud.

Please see the Voya Global Perspectives 2019 Forecast: “The Storm before the Calm” and watch Karyn Cavanaugh’s latest comments here.

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