EUR 21.76 For Business Accounts Only

The Weekly Track all-consuming

- The Weekly Track – All Consuming by Bob Savage
http://trackresearch.com/articles/the-weekly-track-all-consuming/

If we learned anything this year, it’s that global demand has mattered and driven a coordinated lift in economic growth that is the best in over a decade. The end of “crisis” thinking by central bankers and governments post the 2008-2009 great recession is the new reality. How we transition to “normal” has obsessed investors and kept the dance of risk to rates more a waltz than an tango to new equity market highs. Years of easy money appears to have finally brought forward demand but its also brought ugly politics and a fractured world with more forces of de-globalization and nationalism. The start of the holiday trading began last week and it will continue based on consumption data and extend to how central bankers interpret the rewards into their forward guidance. Consumption has also become a part of measuring political risks and moods. The next week is all about the German SPD talks with Merkel and how a potential coalition can form to govern – that sparke
d a significant rally back in the EUR Friday and leaves many rethinking whether rates matter as much as growth. The German Jamaica Coalition failure earlier was quickly forgotten and replaced with SPD hopes. Last week saw a notable improvement in the UK politics and Brexit hopes, despite a tight budget and lower economic forecasts, which adds to the focus on UK confidence and Consumer mood. China was also important last week as the sharp rise in rates there spooked the equity markets even as the CNY gained. US Black Friday will be compared to Singles Day and the early reports suggest that China demand far outstrips US consumer demand. However, the $5bn spent in 24 hours was up 16.9% on line while the foot traffic was down 2%. The push to on-line retail stands out in both nations. The level of wages may be just part of the puzzle as the balancing act of wealth, security and availability of goods mix with the cycle of progress in moving a nation from development of a middle c
lass to maturing into something else.

The price action last week was as exciting as the politics and the data with the big picture themes of chasing risk in a low yield, low volatility world all holding in place. Bitcoin sets a new record high over $9000 this week up 12% – as we live increasingly on-line and virtual– all this despite another crypto currency hack of a wallet this week at Tether. US equities touched new highs in the US, led by small caps, lagged by financials, returned bid despite German politics and the stronger EUR in Europe, while Asia was more mixed with Japan up, China down with rates more than FX the focus. Oil prices touched 2-year highs with the TransCanada Keystone pipeline shut due to the leak in South Dakota and thanks to constant talk about OPEC next week extending production cut plans beyond 1Q2018. Bonds were mixed with curves flatter globally – in part because of the limited supply, in part because of less inflation fears and in part because of the policy doubts inspired by the
China equity drop linked back to deleveraging. Whether central bankers still have a “free” put on equities continues to be important to watching prices – as many see the financial stability mandates as more important than bubble fears globally.