EUR 22.26 For Business Accounts Only

The Weekly Track lenses

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

The key to beating the market isn’t in being right but seeing beyond the consensus. The lenses needed to see a big picture are in play in September as equity markets reached new record highs in the US even as 3Q growth expectations fell toward 2%. The CPI leaves room for an FOMC hike in December even as the market doesn’t price more than 2 more hikes until 2019. The FOMC has a lot to look through in order to understand how easy money policy remains in play despite their 50bps hikes so far and their likely balance sheet reduction in the week ahead. The USD gained modestly last week as rate rose and as the outlook for a political deal on tax reform ignited hope for longer-term growth. The wall of worry didn’t seem to get any lower, with Japan political risks for Abe, with UK May fighting for her job, with North Korea still launching missiles, with Iran and Russia still pushing against US policy and with hurricanes still in the news – next week brings Jose to the Eas
t Coast and Maria into the Caribbean. There isn’t a lot to see when it comes to news except for the BOJ and FOMC meetings next week – with flash PMI reports and Philly Fed the only forward looking data - this again makes the political and policy lenses the most important with German and New Zealand elections likely to be the spotlight towards the end of the week along with the geopolitical concerns over North Korea, Iran and the US. Next week is UN week and NYC will be on lock-down as world leaders use the bully pulpit to push their view of a new world order even as the old one seems to be doing just fine – witness the risk-on mood from last week. That wall of worry may be high but it’s not impossible to see through it.