Weekly Assessments

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Week ending Friday 24th March 2017 This week we got the first whiff of panic in markets if political or economic news is bad. Bad news is really bad for markets as the Fed is signalling a much tougher monetary stance. By the end of the week, the bears remained in charge despite the bulls

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A game of chicken: The Fed lost

Week ending Friday 17th March 2017 Last week we called it a “A Game of Chicken”. We wondered who would blink first. Well, we know now. The Fed blinked. Having cranked up expectations for tightening two weeks previously they did the bare minimum. Just 25bps rate rise, but no change to projections, disposal of Fed

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A game of chicken

Week ending Friday 10th March 2017 Markets spent the week consolidating after the shock pre-announcements by FOMC members of their intention to go in March. The February payroll numbers were OK within the context of the Long Depression. A decent level of job creation and a return to the usually low 2.5% YoY growth in

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Week ending Friday 3rd March 2017 Wow! That was some rally on the back of Trump’s speech to Congress.  The S&P500 was up 1.4% on the morning after the Tuesday night speech. Some, such as the noble John Authers at the FT, have tried to downplay the impact of Trump’s address, suggesting other stuff. Things

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Mixed signals but bond yields dropping dominate as likely rate rises recede

Week ending Friday 24th February 2017 Another weekend of reflection and another excellent start of the week for equities. Some FOMC noise and some administration mis-steps quietened the excitement down over the next few days. The USD was flat over the week but bond yields came tumbling back to near term lows. These contrasting trends

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Week ending Friday 17th February 2017 It was another good weak for equities. The rally has legs. It seems to have little to do with monetary policy directly as bond yields and the USD were both flat over the week. The equity rally that won’t die: building up expectations ever higher There was a continued

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Respectable but low nominal growth forever unless positive monetary reform

Week ending Friday 10th February 2017 A quiet weak until Trump promised a “phenomenal” tax package. Stocks rose a good 0.5%. Stocks rose again on Friday led by financials as the scourge of the banks at the Fed, Governor Tarullo announced he was stepping down in April. He was the unofficial governor responsible for financial

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FOMC, waning confidence, and weak wage growth push back rate rise expectations

Week ending Friday 3rd February 2017 We have argued that it is quite likely there will be just one rate rise in 2017, right at the back of the year just like in 2015 and 2016. Events this week did nothing to shake that view. The FOMC was less hawkish than feared, surveys appeared to

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Market Monetary indicators going positive: will it scare the (current) Fed?

Week ending Friday 27th January 2017 For once it was better to arrive than travel. The sideways moves in markets since the first flush of the Trump rally was broken as equities in particular hit new highs following the inauguration. Perhaps some had thought that the “travel and arrive” adage would give them an opportunity

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Battle lines beginning to be drawn up: Trump versus the (current) Fed

Week ending Friday 20th January 2017 An old adage in financial markets is that it is better to travel than to arrive. The post-election, pre-inauguration rally was modestly impressive. The S&P500 is up around 6% in six months. Most of the rally in equities was very early on, a short-covering overshoot immediately after the election

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