Yesterday, for the first time ever, a Chinese head of state—Xi Jinping—spoke at the World Economic Forum in Davos, Switzerland. He delivered the opening address.
Ironically perhaps, the leader of the largest communist country in the world spoke in defense of globalization and free trade. Of course, today China is largely communist in name only.
Xi astutely noted that “no one will emerge as a winner in a trade war.” While globalization has led to some problems, such as a widened gap between the rich and the poor, it is by no means the lone cause of the world’s problems. Read more about A Symbol Speech 01-18-17
Less than ten days before inauguration, the president-elect held his first press conference since the summer. First and foremost on his mind: cyber security. Of course, the accusations that Russian hackers interfered in the U.S. election offers some explanation why cyber security was a key topic in today’s conference, but in the broader picture, there’s no doubt that cyber security will play an increasingly major role in the defense of our nation and in the investment universe. Read more about Highlighting a Critical Issue 01-11-17
This afternoon the U.S. Federal Reserve released the minutes from its mid-December Federal Open Market Committee (FOMC) meeting, during which the policymakers raised the benchmark federal funds rate for the first time in a year, by one quarter of one percent.
The minutes show that Fed officials now think the gradual-tightening mantra they have repeated for a long time may have to change. It is expected that Donald Trump, who assumes office later this month, will usher in an era of significantly expansionary fiscal spending and higher debt. Read more about Rose Tinted 01-04-17
2017 fast approaches. Prospective tax cuts and possible infrastructure spending will likely face us, along with important developments in the cyber space. We believe that it will be no problem to deal with the upside. The downside risks, on the other hand, can be life changers. Many investors out there have yet to make up their losses from 2000-2002—never mind losses from the 2008 through 2009 meltdown. If you lost 80 percent in either the early 21st century battering or in 2008 to 09, you’d need a 400 percent gain to get even. Read more about Cyber and China 12-28-16
It took them a year, but the Federal Open Market Committee has finally pulled the trigger on another quarter-percentage point rate hike. Today, Janet Yellen and company increased the benchmark federal funds rate to a range of 0.5 percent to 0.75 percent. The hike was widely expected, but based on top Fed officials’ quarterly projections, some officials think it appropriate to raise rates three or more times next year. The surprisingly hawkish projection sent markets down. Read more about A Year in the Making 12-14-16
Over the weekend, Italian voters rejected Prime Minister Matteo Renzi’s reform proposal, leading to his offer of resignation—to be accepted or rejected by the Italian president Sergio Mattarella. The political turmoil in the third largest economy in the European Union presents another wrinkle in the economically troubled continent and could open the door for Italy’s own Brexit referendum down the road. The market reaction has been mild so far, but the situation very much bears close monitoring. Read more about Trouble Brewing 12-07-16
OPEC stoked market optimism in late September by reaching a provisional agreement to limit production while leaving the exact details to be determined in the regularly meeting scheduled for today. As November 30 approached, the optimism waned; it appeared that the positions of individual cartel members still significantly diverged. Specifically, Iran and Iraq wanted exemptions from the output cut. Read more about Oil Snaps Back 11-30-16
With the Thanksgiving holiday just ahead, market participants are in a jovial mood. The S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite, and the Russell 2000 all set record highs this week. It’s the first time all four market indices have closed at record highs on the same day since the last day of the 1990s. Read more about Be Wary of the Rally 11-23-16