The world is far more dynamic, fluid, and technology driven than most appreciate. Consider: What country will be the world’s next largest economic power? What country will have technological supremacy in 2025? What country will have financial supremacy in 2035? What country will have military supremacy in 2047?

The answer to the first question provides insight into the near- or longer-term resolution of the United States and Chinese policy negotiations and market outlook, especially in the first half of 2019.   

The following is one bank’s economic outlook expectation.

Will Martin, Business Insider, in a January 10, 2019, article, "The US could lose its crown as the world's most powerful economy as soon as next year, and it's unlikely to ever get it back." (https://read.bi/2siDw1M) makes the following points:

Jeff Desjardins, Visual Capitalist, in a January 11, 2019, illustration and discussion “Chart: The World’s Largest 10 Economies in 2030,” (https://bit.ly/2H7WQcu)  is graphically revealing.

World’s Largest Economies in 2030

China’s negotiating position strengthening with time

China, the world’s soon to be largest economy, through sheer economic growth, is building bargaining power in today’s trade negotiations, which makes the outcome less than certain for the United States. Couple that with ongoing Chinese momentum to achieve global technological supremacy by 2025, and China’s negotiating power with the U.S. is further enhanced, as is China’s negotiating power with the rest of the world.

The Point

Given the previous discussion, the outcome of U.S. trade negotiations with China are less than uncertain. China is in a strong U.S. and global policy negotiating position; therefore, U.S. Chinese and global fiscal, monetary, and trade policy negotiations will be ongoing and likely contributing to a continuation of the ongoing global slow down at least over the next two to six months and possibly into next year.

This is extremely important because it is having a huge near-term impact on global currency, bond, equity, and commodity markets.

 Market outlook, broadly speaking two to six months

U.S. Dollar. Sideways with upside bias 

U.S. 10-Year Treasury. Yield or interest rate sideways, low possibly in place, but the degree of global weakness over the next two to six months will define a retest of the previous low or potentially a new low  

U.S. Equities. Expect high volatility, sideways downside bias, likely searching for a lower low, possibly two to five months out

Emerging and Frontier Markets. U.S. dollar strength places a drag on emerging markets, high volatility, downside bias, searching for a low, which could also be two to five months out

$WTIC Oil. Sideways, I suspect, still in search of a bottom, but, probably starting no later than the second half of 2019, we will likely see building demand and stronger prices. Given global policy disputes, this market could be exceptionally volatile.

Rice, grains and cotton. Global policy disputes, slowing global growth and fundamentals weigh heavily on these market prices, while weather uncertainties provide hope for support. From the previous discussion, one can gain an enhanced understanding that ongoing policy disputes, especially between China and the U.S., are slowing global growth and the demand for hard assets near term.

Livestock. Potentially more bullish than bearish.

Other media

Video: Farm Futures’ Bryce Knorr, "2019 Grain Market Outlook,” (https://bit.ly/2VRELmk) 01/10/2019,

Cotton Market Outlook and Policy Update with Dr. Don Shurley, University of Georgia, January 17, 2019 3:00 PM CST. Link to register: http://bit.ly/UAEX-Cotton-Update-Shurley-01-17-19 …

Westhoff market outlook and policy webinar

The Market Outlook under the New Farm Bill January 24 ( http://bit.ly/UAEX-Market-Outlook-FarmBill-Westhoff) 2019. 10 AM CST

Source: Bobby Coats, professor in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected]., is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

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