The Monday note - 7 January 2019

• The FTSE 100 rose almost 3.5% in the first week of 2019, closing at 6837.42. This comes after better than expected US jobs figures that signalled ongoing strength in the US labour market, and a new round of trade talks between Beijing and Washington. 
• However, the US Federal Reserve chair, Jay Powell, said that the financial markets were overstating the risks faced by the US economy, and hinted the central bank would only gradually hike interest rates in 2019. 
• China’s central bank is applying pressure on retailers to continue accepting cash, as mobile payments surge in popularity. The People’s Bank of China issued a statement reminding merchants that its notes are legal tender. 
• Verily, a life science firm owned by Google’s parent company Alphabet, has raised $1 billion of funds from external investors. The company is focussed on big data for healthcare, demonstrating the blurring lines between life science and tech. 

Chief Economist comments: 

The new year has begun in bearish style. However, note we saw markets slump on growth fears, only to hear on Friday that the US economy created 312,000 jobs in December, exceeding a consensus forecast of 177,000. The same report showed earnings growing at their fastest since 2009. Yes, there are the worries over China, but critically I do not believe we face the prospect of both of the world’s two largest economies moving into slowdown. It is definitely too early to get bearish on 2019, particularly as there is not enough evidence to support that view.