It's been a bumpy start to the new year.
On one of the first trading days of 2019,
Apple issued an unusual profit warning,
and that sent the iPhone maker's shares sliding almost 10
per cent in one day.
And the rest of the markets followed.
In the US, in Europe, in Asia, equities slid.
And they weren't the only securities that reacted.
We had turmoil in currencies, with a flash crash driving up
the value of the yen.
Equity markets had been sagging for a couple of months.
That was a reflection of a loss of momentum
in the global economy since about the summer.
Both in Europe and in China, growth
had been slowing quite markedly in the autumn.
The exception was the US, where growth has remained strong
on the back of a tax cut enacted one year ago.
But maybe the Apple profit warning marks a change thing.
That was on the back of poor iPhone sales
in China, which in turn may reflect increased worries
about the trade war between the world's two largest economies.
So what do investors expect going forward?
Well, they do seem to think that policymakers will
start to get more worried, too.
Markets bounced when they heard Beijing announce stimulus
to bank lending to boost growth.
And in just a month, expectations
of what the Federal Reserve will do have changed dramatically.
At the start of December, markets
tended to expect another one or two interest rate
hikes in 2019.
That has now changed.
Nobody expects hikes and the majority of the market
now seems to think the likelihood is for a cut.
And in the US, investors following the Federal Reserve
have dramatically changed their expectations
for what will happen in 2019.
Just a month ago, they expected further tightening.
That has changed.
If you look at this chart, the light blue line
indicates the probability that markets
estimate for another rate increase in 2019.
That was 40 per cent as late as early December, a month ago.
That has fallen to almost zero.
In contrast, the purple line, the probability
of no change to rates, and the dark blue line of a cut
in rates, have both gone up.
So that means according to markets,
the overwhelming likelihood is now
that the Federal Reserve will stay the course
or even loosen in 2019.
So to sum up, a turbulent start to the year
in markets, who now expect policymakers
to turn from a more hawkish to a more dovish stance in 2019.
We'll soon find out if they're right.