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Will the rally continue
Commentary & Opinion, Economic Market
As we strap ourselves in and get ready for the rollercoaster ride that will be Donald Trump’s stint in office, we thought it was a good time to contemplate how events could play out in the years ahead. Studies has been done into the effects of populist governments – like Trump’s – and how their policies impact economic performance and the markets.
Initially, there is a sugar hit for markets and the economy – and indeed we are seeing this now with Trump. But after five or so years, populist policies lead to inefficiencies and wastes in the economy. The promises that brought the government to power are left unfulfilled and the people who supported them are left wanting.
Trump’s tax promises boost markets
Commentary & Opinion, Economic Market
Equity markets, the US Dollar and commodities all continue to trended higher buoyed by revived optimism around President Trumps policies, coupled with strong US earnings reports.
The continued rally was largely triggered by President Trump's promise of an impending "phenomenal" announcement on taxes.
In general, concerns about the President's policies are easing slightly as it becomes evident he won’t be able to simply ride roughshod over the US judicial system. He is also showing some sense like telling the Chinese President that he’ll respect the "One China" policy.
Dow Jones on winning streak
Commentary & Opinion, Economic Market
The market is awash with talk this week of the 12th consecutive rise of the Dow Jones Industrial Average. The last time the bellwether indices of US equities had a longer "winning streak" was in 1987.
But it’s not just the DJIA that’s powering ahead. Global equity markets are also posting record highs. Bulls have taken heart from promises made by US President Donald Trump regarding fiscal stimulus, infrastructure spending and deregulation.
Odds strengthen that US will hike rates
Commentary & Opinion, Market Economic
Rates look almost certain to rise in the US this week after the release of strong February employment data.
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.
Countdown to Brexit kicks off
Commentary & Opinion, Market Economic
Get ready for a fun week ahead as the UK is set to trigger Article 50 which will bring Brexit another step closer to reality. Article 50 starts the countdown to the UK’s exit as they enter two years of negotiations with the EU.
We doubt the notification itself will trigger any sharp falls, but markets will no doubt be keeping a close eye on the negotiations over the coming months.
Syrian missile strike shakes markets
Commentary & Opinion, Economic Market
The decision by Trump to carry out the air strike raises questions about his wider foreign policy intentions. He has previously signalled a desire to pull out of conflicts in the middle east.
However, market fears subsided quickly, and turned their attention to the US economy. At first glance the US employment report appeared disappointing falling far short of expectations.
French election bumps Euro higher
Commentary & Opinion, Economic Market
After a nail-biting campaign, the first-round of voting in the French Presidential election took place over the weekend. The centrist Emmanuel Macron and euro-sceptic Marine Le Pen winning the most votes.
The French people will now be choosing between two radically different visions for the country in the second round of voting on the 7th of May.
If Macron wins, he will be the first independent President of the Republic in France. This would delight France’s EU partners and reassure investors. This is the most likely outcome, but anything is possible.
The world economy looks like it should expand at a healthy pace over the next two years if the latest forecasts from the International Monetary Fund are anything to go by.
Aussie dollar to weaken
Commentary & Opinion, Economic Market
The Aussie dollar is likely to remain under pressure for the time being as commodity prices continue to fall and Australia’s interest rate premium narrows.
The price of Australia’s main commodity exports iron ore and coal have a strong influence on the value of the Australian dollar. Recently, iron ore prices have fallen to about $65 a tonne – a big drop compared to the $90 a tonne they reached late last year and earlier this year.
Even when pricing hit $90, the Australian dollar didn’t get much above 75 cents. This doesn’t paint a strengthening outlook for the Australian Dollar in the current environment.
Trump ups political risk
Commentary & Opinion, Economic Investing
Offshore equity markets have recovered quickly since last Wednesday’s sell-off which was prompted by growing fears that US President Trump would be impeached. Markets aren’t concerned with the impeachment itself, but rather what would happen to the re-inflation policy if Trump wasn’t President anymore.
Over the weekend, more news stories have come out on Trump’s actions. The speed of the stories means that we are likely to hear more over the coming weeks.
Will the rally continue
Commentary & Opinion, Economic Market
As we strap ourselves in and get ready for the rollercoaster ride that will be Donald Trump’s stint in office, we thought it was a good time to contemplate how events could play out in the years ahead. Studies has been done into the effects of populist governments – like Trump’s – and how their policies impact economic performance and the markets.
Initially, there is a sugar hit for markets and the economy – and indeed we are seeing this now with Trump. But after five or so years, populist policies lead to inefficiencies and wastes in the economy. The promises that brought the government to power are left unfulfilled and the people who supported them are left wanting.
Trump’s tax promises boost markets
Commentary & Opinion, Economic Market
Equity markets, the US Dollar and commodities all continue to trended higher buoyed by revived optimism around President Trumps policies, coupled with strong US earnings reports.
The continued rally was largely triggered by President Trump's promise of an impending "phenomenal" announcement on taxes.
In general, concerns about the President's policies are easing slightly as it becomes evident he won’t be able to simply ride roughshod over the US judicial system. He is also showing some sense like telling the Chinese President that he’ll respect the "One China" policy.
Dow Jones on winning streak
Commentary & Opinion, Economic Market
The market is awash with talk this week of the 12th consecutive rise of the Dow Jones Industrial Average. The last time the bellwether indices of US equities had a longer "winning streak" was in 1987.
But it’s not just the DJIA that’s powering ahead. Global equity markets are also posting record highs. Bulls have taken heart from promises made by US President Donald Trump regarding fiscal stimulus, infrastructure spending and deregulation.
Odds strengthen that US will hike rates
Commentary & Opinion, Market Economic
Rates look almost certain to rise in the US this week after the release of strong February employment data.
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.
Countdown to Brexit kicks off
Commentary & Opinion, Market Economic
Get ready for a fun week ahead as the UK is set to trigger Article 50 which will bring Brexit another step closer to reality. Article 50 starts the countdown to the UK’s exit as they enter two years of negotiations with the EU.
We doubt the notification itself will trigger any sharp falls, but markets will no doubt be keeping a close eye on the negotiations over the coming months.
Syrian missile strike shakes markets
Commentary & Opinion, Economic Market
The decision by Trump to carry out the air strike raises questions about his wider foreign policy intentions. He has previously signalled a desire to pull out of conflicts in the middle east.
However, market fears subsided quickly, and turned their attention to the US economy. At first glance the US employment report appeared disappointing falling far short of expectations.
French election bumps Euro higher
Commentary & Opinion, Economic Market
After a nail-biting campaign, the first-round of voting in the French Presidential election took place over the weekend. The centrist Emmanuel Macron and euro-sceptic Marine Le Pen winning the most votes.
The French people will now be choosing between two radically different visions for the country in the second round of voting on the 7th of May.
If Macron wins, he will be the first independent President of the Republic in France. This would delight France’s EU partners and reassure investors. This is the most likely outcome, but anything is possible.
The world economy looks like it should expand at a healthy pace over the next two years if the latest forecasts from the International Monetary Fund are anything to go by.
Aussie dollar to weaken
Commentary & Opinion, Economic Market
The Aussie dollar is likely to remain under pressure for the time being as commodity prices continue to fall and Australia’s interest rate premium narrows.
The price of Australia’s main commodity exports iron ore and coal have a strong influence on the value of the Australian dollar. Recently, iron ore prices have fallen to about $65 a tonne – a big drop compared to the $90 a tonne they reached late last year and earlier this year.
Even when pricing hit $90, the Australian dollar didn’t get much above 75 cents. This doesn’t paint a strengthening outlook for the Australian Dollar in the current environment.
Trump ups political risk
Commentary & Opinion, Economic Investing
Offshore equity markets have recovered quickly since last Wednesday’s sell-off which was prompted by growing fears that US President Trump would be impeached. Markets aren’t concerned with the impeachment itself, but rather what would happen to the re-inflation policy if Trump wasn’t President anymore.
Over the weekend, more news stories have come out on Trump’s actions. The speed of the stories means that we are likely to hear more over the coming weeks.