EUR 22.10 For Business Accounts Only

The Weekly Track dancing

- The Weekly Track – Dancing by Bob Savage
http://track.com/articles/the-weekly-track-dancing/

First rule of dancing -figure out who has the lead - and second rule, don’t step on their toes. In the world post 2008 now placidly called the great recession, the lead was growth with its moderation and faltering step hardly inspiring. Today, Inflation takes the lead – with the dance between the two more like a slow waltz than a sexy samba. That is the lesson for the summer of 2017 as policy normalization takes over from extraordinary policy amidst a world full of growth and hope. The anger of the voters stopped short of cataclysmic change in Europe and with it started a world rethinking of risk making 2017 the new year for global goldilocks – not too hot, not too cold, but just right – for investors everywhere. Of course there are risks for markets still – the Senate killing of a repeal and replace plan leaves the risk for a Trump defunding Obamacare subsidies – this could lead to a longer stall for tax reform and fiscal stimulus. The Chinese seem to be bet
ting that Trump won’t attack North Korea even as their Friday missile launch made clear they could reach the US East Coast now. However, the US is making sure there is a clear response and sends B-1B bombers over Pyongyang and threatens another round of sanctions on China. Further pain on global trade could be difficult for markets to ignore. Russia is playing hardball with the US over its sanctions and adds to this fear. Venezuela Maduro plays hardball with the electorate in a constitutional vote today while Pakistan searches for another PM after the ouster of Sharif with Imran Khan looking to take the job in Tuesday vote. Both highlight the issue of stability in EM and the risks to investors in putting money into higher risk places. The goldilocks story rests in balance with central banks not acting too fast or too slow with data dependence everywhere focused on inflation and growth leading to a bit choppier forward view on volatility – leaving us primed for a new be
at into August. Until then US markets are likely to celebrate their newfound joy in a weaker USD and higher revenues sparked from a coordinated global recovery.