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http://track.com/articles/the-weekly-track-wall-of-worry/
Between North Korea launching another missile, Trump battling the press over the FBI Comey firing and the fallout of a Friday global Cyber-attack, the worst case scenarios for global markets should be playing out – but they aren’t. We are in an uncomfortable “Goldilocks†position where technicals beat fundamentals for now. Funny how the list of concerns from 2015 remain relevant today and suggest we still have bricks to climb that are unknown in 2017. There is a deadly calm over markets and part of the reason for this lack of fear falls back to the FOMC and the odds of a June hike shifting from certain to probable. This is the view that Yellen may not be selling S&P500 puts to the market but she does sell volatility. The mechanism of QE and lower real rates globally has been the force that keeps financial stability intact or at least gives the impression of such through its drive to find riskier yields anywhere particularly when they wobble. The weaker US data thi
s week coupled with more political intrigue leaves many doubting the US growth and reflation story that drove US assets and the USD to the highs at the beginning of the year. The doubting game rises with China as well, even after its April its CPI rose more, its PPI fell and the M2 missed even as its CNY loans rose – deleveraging risks in China are ongoing casting doubt about the commodity and emerging markets as well. Of course there are other stories stabilizing markets – like 1Q corporate earnings and the European recovery mixed with the lessening of extreme political outcomes there. The Macron victory in France was seen as a turning point for European risks and yet that big bang in the EUR or the equity market faltered as the ECB expectations for tapering and matching the FOMC march to normalization rose. This put the risk for the week ahead into positions and whether the news mix ahead (both known and unknown) will prove that we are merely stubbing our toe rather
than falling off the wall of worry.
The Weekly Track wall-of-worry
- The Weekly Track – Wall of Worry? by Bob Savagehttp://track.com/articles/the-weekly-track-wall-of-worry/
Between North Korea launching another missile, Trump battling the press over the FBI Comey firing and the fallout of a Friday global Cyber-attack, the worst case scenarios for global markets should be playing out – but they aren’t. We are in an uncomfortable “Goldilocks†position where technicals beat fundamentals for now. Funny how the list of concerns from 2015 remain relevant today and suggest we still have bricks to climb that are unknown in 2017. There is a deadly calm over markets and part of the reason for this lack of fear falls back to the FOMC and the odds of a June hike shifting from certain to probable. This is the view that Yellen may not be selling S&P500 puts to the market but she does sell volatility. The mechanism of QE and lower real rates globally has been the force that keeps financial stability intact or at least gives the impression of such through its drive to find riskier yields anywhere particularly when they wobble. The weaker US data thi
s week coupled with more political intrigue leaves many doubting the US growth and reflation story that drove US assets and the USD to the highs at the beginning of the year. The doubting game rises with China as well, even after its April its CPI rose more, its PPI fell and the M2 missed even as its CNY loans rose – deleveraging risks in China are ongoing casting doubt about the commodity and emerging markets as well. Of course there are other stories stabilizing markets – like 1Q corporate earnings and the European recovery mixed with the lessening of extreme political outcomes there. The Macron victory in France was seen as a turning point for European risks and yet that big bang in the EUR or the equity market faltered as the ECB expectations for tapering and matching the FOMC march to normalization rose. This put the risk for the week ahead into positions and whether the news mix ahead (both known and unknown) will prove that we are merely stubbing our toe rather
than falling off the wall of worry.
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Robert Savage
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