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The Morning Track hints

- The Morning Track - Hints by Bob Savage
http://track.com/articles/the-morning-track-hints/

Talk is more powerful than data today. Over the weekend, UK PM May suggested in a Sky TV News interview the UK may pull out of the European Single Market. That sent GBP to 10-week lows, rallied Gilts and leaves many wondering how Brexit will play out in 2017 on the economy. The future matters more than the present or past – which hits at the nature of trading changing from reactive central banks to pro-active ones. The other comments that mattered overnight came from China where a unified Anti-Trump talk hit the press. Vice Finance Minister Zhu noted that China GDP was 30% of the global growth last year, so bad US choices will hurt the world, not just China. China’s former PBOC member Li Daokui took im at Trump's domestic fiscal policy proposals, warning they would accelerate the Federal Reserve's rate hike pace and bring disaster to global financial markets. He also slammed Trump's proposal to impose tariffs on imported products as discriminatory. "It does not mak
e any sense. China needs to prepare for a trade war," he warned. Another former PBOC member Yu Yongding, warned Trump was a
threat to the world political and economic order.Trump is trying to change U.S. policy toward China that has been in place since President Richard Nixon in the early 1970s, said Yu. The point is that the world order and economic order has a higher degree of uncertainty about Trump economic and foreign policy than the markets or economic forward looking survey’s suggest. Just look at the Sentix Eurozone economic indicator for January jumping to 18.2 from 10 to get the point. Markets are bulled up and not just in the US. All that makes for a lot of hand wringing by analysts while technicians salivate over breaking out. When prices don’t reflect rational fears forward, the volatility goes up. We saw that last week as the USD went full circle up and down holding trend support. Hints of future trouble – as UK PM May says clearly – start with muddled thinking and there is none of that when it comes to Brexit for her. She is fighting back from “maybe” to “is”
when it comes to a full overhaul of UK trade and economics and the GBP is the key tool for market adjustments accordingly. That makes us all GBP traders again.