Friday, May 6, 2016
Global macro themes on one page for May
The month does not really start until the employment numbers are announced. The April job gains were lower than expected and showing a down trend. For a data dependent cautious Fed, there is no evidence to strengthen the case for a rate increase.
In fact, the numbers for some suggest that unconventional monetary policy is not working. We don't believe in that extreme view; however, at this point in the business cycle, monetary policy may not be enough to sustain growth. Unfortunately, there is no help on the fiscal side, so investors have to balance caution against a world where central banks continue to generate cheap money. We may always keep in the back of our minds the adage, "Don't fight the Fed", but weak growth requires consideration of more conservative portfolio structures.