Friday, September 7, 2018

Investment Perspectives Podcast, Episode 4: Trade Risks, Fed Rate Hikes, and Market Forces

This Investment Perspectives discusses China's balancing of policy and economic risk, expectations around Fed rate hikes, and the effects of market forces.

You can read the full Investment Perspectives here.

In this month's issue:

“Two Things At Once" Mark Luschini
China’s President (for life) Xi Jinping is trying to do two things at once: ease policy to offset the economic disruption induced by tariffs imposed by the U.S. on Chinese imports, while cracking down on systemic financial risk. The latter is dictated by a belief that China’s economic imbalances threaten to undermine its overall stability and global rise—a delicate balance indeed.

“Expectations Vs. Reality” Guy LeBas
One of the most common discussions in these hallowed pages is one of Federal Reserve (Fed) expectations—what they are likely to do with short-term interest rates given a most likely economic scenario. At present, as per an August 24th speech by Fed Chair Jay Powell at the Jackson Hole Conference, “I see the current path of gradually raising interest rates as the FOMC’s approach to taking seriously both of these [upside and downside economic] risks.” That’s a pretty clear signal of the Fed’s intentions to continue raising short-term interest rates.

“Defying Gravity"
Greg Drahuschak
In 1868, Sir Isaac Newton concluded that every particle attracts every other particle in the universe with a force directly proportional to the product of their masses and inversely proportional to the square of the distance between their centers. Following the recent market move that set numerous new highs in many major indices, investors wonder if Sir Isaac’s law of gravity soon might apply to the stock market.