Up until recently the U.S. was one of the few economies to show acceleration while the rest of the world was applying the breaks. Now, with job growth and manufacturing activity in the U.S. slowing markedly over the past two months, no economy appears to have escaped the slowdown.
For the third time since 2008, financial markets are pricing in a deflationary rather than inflationary future. The reasons for this are understandable. There is now strong evidence that global economic activity is slowing. The euro-area banking and sovereign debt crisis is worsening.
The market has been stuck in a narrow trading range this week as investors await major catalysts ahead. There have been a few events this week that could have shaken equities free from this range, but they didn’t have enough pull in comparison to some events directly ahead. Technically, I could paint both a bearish and a bullish picture.
The IRS seems to be putting the infamous FATCA statute into effect two years early. It’s already withholding 30% of all U.S. income generated from U.S. securities accounts owned by non-resident aliens (NRA). That’s only supposed to begin happening in two years.
In the opinion of the Global Money Trends newsletter, the Fed is trapped in a political minefield, and won’t offend the Republican Party. Therefore, the Fed is expected to stay politically neutral ahead of the Nov 6th elections, and leave QE-3 on the back burner (assuming Greece does not exit the Euro).
One of oil's most important characteristics is its fungibility, which means that a barrel of refined oil from Texas is equivalent to one from Saudi Arabia or Nigeria or anywhere else in the world. The global oil machine is built upon this premise - tankers take oil wherever it is needed, and one country pays almost the same as the next for this valuable commodity.
The management of the Eurozone debt crisis is dysfunctional. In our assessment, to save the Euro, policy makers must focus on competitiveness, common sense and communication. If policy makers strived to achieve just one of these principles, the Euro might outshine the U.S. dollar.
For many years, this classical conditioning has been prevalent across financial markets the world over but, while its prevalence cannot be doubted, it has remained unobtrusive for one reason and one reason only—it has worked almost flawlessly.
The incentives to take on debt are so ubiquitous that we underestimate their pernicious power to trigger self-destructive behavior. Want to go to college? Just borrow the money now, with no payments until you graduate.
Following negative data last week, investors were clearly concerned about global growth and anxiously anticipated government actions.