The major themes for September have not changed
significantly from last month. The reason is simple. The markets have not
moved much and the economic information that we have received in the last month
has not changed expectations. The two big events were the Jackson Hole
conference which provided little new light on Fed behavior and the confirm
payroll last week which rolled back some of the real economic enthusiasm.
The markets are one month closer to the US election that may have a
large market effect once the focus is more clearly centered on the impact of
populism. One can argue that both candidates want to tap into populist
sentiment. The difference is whether the approach is from the left or right. In
either case, populism often leads to significant change that will likely dampen
investment and cause an increase in investor caution. Keys to the month will
not be the Fed meeting but action by the BOJ or ECB. Both may increase their
reliance on current policies of quantitative easing regardless of weakened
impact.
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