Congressional Juggling:
The people of the United States have spoken! With both Trump’s Republican party and the Democrats claiming victory over the mid-term elections in the public eye, markets have been more decisive in the face of the ballot. The Republicans held control of the Senate, however, ceded power of the House of Representatives to the Democrats. Markets have interpreted the mid-term elections by undermining the value of the US Dollar, likely pricing in the increased degree of political gridlock that the United States will face in pursuing economic growth. For months, economists and strategists alike have been debating when will economic growth in the United States peak. Given Trump’s pro-market and pro-growth presidency, political headwinds prevent fiscally driven economic growth, increasing the impetus for Powell’s Federal Reserve to pause its interest rate hiking phase. Positively, with the House being controlled by the Democrats, Trump’s capacity to increase the United States’ extant burden of debt does limit the extent to which the White House could drift into fiscal profligacy. Italy’s spending plan remains in the foreground of the picture of Eurozone risk with signs of inflationary pressure in the Eurozone being overwhelmed by political instability. The Pound received a sustained yet light bid at market open as investors continue to orientate themselves towards a long-awaited Brexit deal.
Discussion and Analysis by Charles Porter
Where’s the Trump Put? On Tuesday Trump went some way towards remediating for his comments that appeared to show a disregard for a recession over the weekend. In a Fox News interview on Sunday the President declined to rule out the prospect of a recession, contributing to the stock market decline come Monday. For what […]
Change of heart? Over the last 24 hours the market has decisively reframed its position of tariffs. Its ability to reshape the logic of tariffs is likely a result of the heightened volatility and risk witnessed throughout the market. The outcome is as follows: tariffs whilst ordinarily and previously thought to be inflationary and a […]
EURUSD rotation EURUSD has made a dramatic U-turn from the inevitable grind lower to parity most analysts were predicting. A stronger Dollar come year end is still not being removed from the base case by most. However, its current momentum higher stands in defiance of that outcome. However, as we are seeing now, there are […]