View from London: 4Q Trajectory Better than 3Q Globally

10/27/2017 5:19 pm EST

Focus: STOCKS

Robert Savage

Partner & CEO, CCTrack Solutions

The force of demographics and technology on inflation keeps markets on edge as the rotation force of moving money to equities over bonds was by design. Central bankers are the key buyers and price setters for riskless assets, writes Bob Savage, CEO of Track Research Friday.

The world remains spinning off to a good place.

The trajectory for 4Q is for better than 3Q growth globally. The last week brought more evidence of such – with China GDP in 3Q at 6.8% a confirmation of stability, with European growth on target for another 0.5% q/q and with the US continuing to show strong labor markets – witness weekly claims back to 1973 lows - and a bounce back after the hurricanes.

There is support for equities from this growth translating into good earnings and in central bankers promising to remain easy enough to allow the party to continue. The data dependency rests on inflation – with Japan, Europe and the U.S. all below the 2% targets and with trajectories more linked to commodities than to wages as the key driver.


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The force of demographics and technology on inflation keeps markets on edge as well and the rotation force of moving money to equities over bonds was by design and it has left central bankers as the key buyers and key price setters for riskless assets.

The world could be changing and whether that happens quickly rests on politics – with tax reform in the U.S., with more Abenomics in Japan, more financial reforms in China and with more labor reforms in Europe.

Over the weekend, the snap election of Abe provided a “super majority” that gives the PM another chance to shoot his third arrow for reform.

On the other side of the world, the Czech Republic elects a billionaire populist as its new leader adding to fears that the European shift to fragmentation and less traditional politics continues. The Ano Party led by Babis received 29.7% of the vote – leading by 20% over the next rival and with the Pirate party and the far-right SPD in 3rd and 4th place respectively.

This will add to troubles for the ECB and for the next big election for Italy as key for the fate of the European Union.

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