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The Weekly Track lightness

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

Can markets ignore the dark set of events over the weekend and the potential for more trouble ahead? Some weeks beget more questions than answers. We all feel the horror of terrorism and its asymmetry. The stoic reaction to continue on with life as the best way to honor those innocent lives lost seems somehow an insufficient guide for a better future. This seems only fair given the way summer light beats back winter gloom with rational people wanting more from their governments to protect them. There is a battle of wills at play as the efficiency of markets collides with the geopolitical reality of the present world with the Thursday, ECB policy decision, the UK election and the testimony of fired FBI Chief Comey providing a Trifecta of potential pain. Add in the vote Sunday in the Mexico State as it pits the PRI against the leftist Morena pary led by Obrador, in what many see as a precusor to the 2018 Presidential race. The ruling PRI risks losing the governorship – so
mething that hasn’t happened in 90 years. Needless to say, political doubts in the UK, US and Mexico reflect back in the currency markets – and this makes for concerns about how rates, stocks and inflation all play out in the bigger picture. The BOE reaction to the Brexit surprise was to cut rates to 0.10% and add to QE. The economy has seen inflation and a weaker GBP with some better growth in part from the GBP and yield cut. Whether Mexico sees the same isn’t yet clear. As for the US, the ongoing Trump political doubts has pushed down the USD while the mixed data has hit bond yields. Whether this helps growth and equities remains central to keeping markets lighter than the darkness of the moment.