No news is……...Boring!

Necessity is the Mother of invention

Market analysts whose main role is to drive traffic to their employer’s website or trading platform often feel the pressure to add importance or credence to a story which deserves neither. The summer is traditionally the “silly season” for news stories and although, there is clearly a lot going to happen politically and economically as the year wears on, for now we should say it like it is.

New drivers come along on their own without too much encouragement and there are always black swan events.

There are two events this week that will attract the market’s attention; the FOMC meeting and preliminary Q2 GDP in the U.S.  

The Fed is clearly on hold. Members have been chastened by questions that have been asked regarding their rate hikes and have now become “data dependent”. This is the catch all phrase that is now popular among Central Bankers who are unable to do their job and interpret economic cycles and activity without a set of numbers in front of them.

The GDP data has been pre-empted somewhat by the IMF report but Q2 is likely to have seen an improvement to around 2.5% following Q1’s anaemic 1.4%.

 

Dollar suffering from Trump’s mounting problems.

OK I know what I said above but this is the story that know no bounds. President Trump may be an easy target but that is because he casts such a huge shadow.

More than six months into his presidency it is becoming clear that he has no intention of becoming Presidential. The list of damning evidence is growing almost daily; Russiagate, healthcare and climate change have been his “headline” controversies but he manages to back them up with a degree of bombast and self-publication that is almost beyond belief.

The very real issues are Trumps credibility and his ability to work with congress to pass legislation that was promised during his campaign. We are already 12.5% through his Presidency and the his most worthwhile achievement is that he has shaken hands with Vladimir Putin (twice apparently). A lot of Republican voters see is greatest achievement as being that he isn’t Barack Obama!

The dollar is now at a sixteen-month low as traders’ concerns over fiscal reform and economic stimulus heading in the same direction as the wall with Mexico and reversal of Obamacare come to the fore.

 

Brexit; there is always Brexit.

I attended a meeting yesterday of a committee I belong to that is examining the effect of Brexit on U.K. trade. We, collectively, have adopted an entirely agnostic view of Brexit being a good or bad thing for the U.K commercially.

I was struck by just how business will be affected by a decision that was taken on a personal level. Most people who voted in the referendum, (I know I certainly did), did so by reacting to how their personal life is affected by Brussels and that is certainly how leave campaigned. It therefore backs the theory that had Remain chosen to fight a campaign based on the commercial issues Brexit will cause rather than trying to counter the “Farage driven” immigration rhetoric the result could have been very different.

It was professional traders who drove Sterling down by 20% in the wake of the referendum and the man in the street has now seen over two holiday seasons just how much less his pound will buy on the Costa Del Sol, or the Amalfi Coast.

Brexit is happening, that much is clear but the uncertainty over just how hard or soft that Brexit will be is likely to continue until 28th March 2019, the day before the lights go out.