Stock-market investors should brace for a plunge in business investment, analyst warns

[mahatmakanejeeves]

This is just one person's opinion.

Stock-market investors should brace for a plunge in business investment, analyst warns
Published: Jan 30, 2019 9:54 a.m. ET

Confidence surveys all point to weaker capex spending

By CHRIS MATTHEWS MARKETS REPORTER

For a brief, shining moment, it looked as if American corporations had learned to invest again.

Following the passage of the late-2017 corporate tax reform, U.S. companies rushed to pour money into spending related to investing in research and development, new projects and equipment. So-called capital expenditures, or capex, rose 10.1% in the first half of 2018, more than double the 4.1% increase seen in the six months prior.

However, since then it has sputtered, rising a comparatively meager 2.5% in the third quarter, and there’s reason to expect this downtrend to continue, according to Veneta Dimitrova, senior U.S. economist at Ned Davis Research Group. The analysts said recent surveys on the business outlook paint a unfavorable picture that could spell further drops in corporate investments and possibly an economic retrenchment, a despite a jolt from tax cuts 13 months ago.

“We’ve been skeptical that the massive $1.5 trillion tax reform of 2017 would supercharge U.S. investment growth for years to come,” Dimitrova wrote in a Tuesday research note to clients. “Now there are mounting signs from business indicators that the downward pressure on capex will continue in 2019.” ... Dimitrova points to the Conference Board’s CEO Confidence index, which fell from a reading of 55 in December to 43 in January — its lowest reading since the third quarter of 2012.
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[TheFarseer]

1. I have heard

Chinese investors are under pressure from their government to invest in Chinese companies and not US companies because of concerns their economy is slowing down. There are numbers to back this up too.