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You lose a trench-war by slow retreats, giving up non-essentials until you have lost the ground that matters and by extension the confidence of the soldiers as they suffer seemingly endless battles with nothing to show for their pain. The word retrenchment today has become synonymous with unemployment, downsizing, and cutting back excess from bloated budgets. Economies are the same, and as central bankers have become the generals they find little room to maneuver now. The spate of weaker global growth data mixed badly with the turnabout of central bankers deciding to ease back on normalization, as was the story fro the RBA or even ease as was the case of the RBI. Central bankers looked behind the curve of market confidence as many continue to fear geopolitical hits from Brexit and China trade cascading into their own economies. Take some chips off the casino table, run a bar-bell risk portfolio, fade January gains for a February snow storm of renewed volatility – that i
s what investors heard from analysts this week. Yet the price action was more 2018 divergence with US equities squeaking out a gain, most of Asia was closed for the Lunar New Year Holidays and reopened lower, while Europe suffered another set of growth doubts with the ECB Bulletin and EU Commission forecasts for 2019 growth sharply lower. The BOE also cut growth expectations for 2019 thanks to Brexit and deadlocked politics. The bond markets rallied sharply last week, as the central bank turnabout on normalization brought relief. The problem ahead is one about retrenchment and how globalization plays against divergence. The 4Q 2018 earnings have helped US shares but they also plant the seeds for trouble into 2019. The earnings for US globally facing companies highlight this point as earnings growth for them is almost half that of more domestic companies in 4Q and expected to be less than 1/3 in 2019.
The Weekly Track retrenchment
- The Weekly Track – Retrenchment by Bob Savage/articles/the-weekly-track-retrenchment/
You lose a trench-war by slow retreats, giving up non-essentials until you have lost the ground that matters and by extension the confidence of the soldiers as they suffer seemingly endless battles with nothing to show for their pain. The word retrenchment today has become synonymous with unemployment, downsizing, and cutting back excess from bloated budgets. Economies are the same, and as central bankers have become the generals they find little room to maneuver now. The spate of weaker global growth data mixed badly with the turnabout of central bankers deciding to ease back on normalization, as was the story fro the RBA or even ease as was the case of the RBI. Central bankers looked behind the curve of market confidence as many continue to fear geopolitical hits from Brexit and China trade cascading into their own economies. Take some chips off the casino table, run a bar-bell risk portfolio, fade January gains for a February snow storm of renewed volatility – that i
s what investors heard from analysts this week. Yet the price action was more 2018 divergence with US equities squeaking out a gain, most of Asia was closed for the Lunar New Year Holidays and reopened lower, while Europe suffered another set of growth doubts with the ECB Bulletin and EU Commission forecasts for 2019 growth sharply lower. The BOE also cut growth expectations for 2019 thanks to Brexit and deadlocked politics. The bond markets rallied sharply last week, as the central bank turnabout on normalization brought relief. The problem ahead is one about retrenchment and how globalization plays against divergence. The 4Q 2018 earnings have helped US shares but they also plant the seeds for trouble into 2019. The earnings for US globally facing companies highlight this point as earnings growth for them is almost half that of more domestic companies in 4Q and expected to be less than 1/3 in 2019.
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Track
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Robert Savage
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