Global growth stories and the easy money policies of central bankers remain – making the elixir for investors too enticing to pass up. Yet, there are places of divergence where worry can still live if not thrive, writes Bob Savage, CEO of Track Research over the weekend.
In psychology, lack of fear is troubling – it’s a signal for psychopaths and suppression of emotions that lead to bigger dysfunction latter. Perhaps the market needs a therapy session or perhaps we just need a bit more leverage to see the extremes of the present market turning into an obvious bubble.
For markets, last week was a turning point in mood. The most hated bull market has changed to one that is being embraced globally. The 3Q earnings reports are part of the shift, as is the rise of tax reform expectations (with companies happy to see a 35% to 20% tax shift), the lack of bad news in geopolitics another.
The coordinated global growth stories are intact across the world and the easy money policies of central bankers remain – making the elixir for investors too enticing to pass up.
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However, there are places of divergence where worry can still live if not thrive.
Saudi may be one of them – as the U.S. pushes for the Aramco IPO – the weekend headlines of 11 Princes being arrested highlights the power struggle there by the crown prince.
Trump and Putin met over the weekend and discussed North Korea, with Abe teed up next over a long golf game for much of the same.
The point being that U.S. policy in Asia and how its allies and frenemies respond will matter into how markets trade next.
The consumer mood in the U.S. is robust as energy price hikes haven’t yet hurt and as the lift in wealth from their 401k accounts has offset the lack of wage increases.
The ability to see the next leg up in markets rests on the mood holding from last week if not expanding. Against that politics matter. The lack of Trump’s support seems extreme and unlikely to help the fate of U.S. tax reform suggesting that maybe we are seeing one leg of the present run up at a turning point.
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