Experience the Decision Economics Difference for yourself.
The Global Markets Weekly – 9/21/18
Tech Reshuffle Finally Here, FOMC Ahead
It’s a busy week ahead in the U.S. dominated by a Fed meeting, Supreme Court nomination drama, and two developments for the technology sector. On the latter, first is the long-anticipated sector reshuffling that has several major companies moved into the new Communication Services sector, and the second is news that the White House may direct agencies to look into online platforms for antitrust and “bias” concerns.
The reshuffle of the S&P 500 a few years ago to add a Real Estate sector coincided with a period of underperformance for the new addition as the interest rate environment shifted. Now, investors need to consider whether the regulatory environment is shifting too for a range of high-flyers, given political pressure from both sides of the aisle and wide profit margins.
As for the Federal Reserve, a hike to a 2.0% to 2.25% range on the federal funds rate is assured as few if any officials can be feeling less confident about the U.S. economy and inflation pressures. Given the Federal Reserve still sees itself as accommodative with “neutral” nearer 3%, letting up on the gas amid 4% growth, 2% inflation, and a sub-4% jobless rate should not surprise investors. There may be mild hawkish adjustments to the language and forecast tweaks, and investors will look for any hints balance sheet runoff needs to be adjusted sooner rather than later. See a fuller preview in our U.S. section.
Chair Powell will continue to make his mark at the Fed, and 2019 will be an interesting year with press conferences due after every meeting, not just four a year. Each meeting will be more live, adding flexibility amid two-sided risks. Flexibility need not mean “hawkish”, as it does not appear that the Powell-led Board will be overly influenced by more hawkish staff who trust in models that suggest a lot more inflation is around the corner. Powell realizes that Greenspan’s greatest achievement at the FOMC was not sharing the staff’s inflation anxieties in the mid-1990s. Powell also knows the next danger signs may come more from financial markets than from wage and price inflation.
Coming Week’s Key Indicators and Events
| Release | DE / Consensus | Comment | |
| U.S. | FOMC (We)
PCE Inflation (Fr)
|
+25 bps / +25 bps
0.1% / 0.1% m/m |
We expect another hike in December, then three more in 2019 as U.S. economy continues to outperform expectations.
Topping in y/y rates, drifts just above 2% ahead. Spending still solid in Q3 in inflation-adjusted terms. |
| Euro | Flash Sep CPI (Fr)
Core CPI ECB Bulletin (Th) |
2.0% / 2.1% y/y
1.0% / 1.1% y/y
|
Core not going anywhere fast, PMI data mixed last week. Fiscal outlook and tariffs remain in risk realm, less in data. |
| UK | Q2 GDP Rev. (Fr) | 0.4% / 0.4% q/q | |
| Japan | Sep Tokyo CPI (Fr)
Ex fresh food Ex food & energy Aug Ind. Prod (Fr) Aug Unempl (Fr) |
1.3% / 1.1% y/y
0.9% / 0.9% y/y 0.6% / 0.6% y/y 1.8% / 1.5% m/m 2.5% / 2.5% |
Early looks at September imply some settling back after jump in national-level CPIs in August. Ex-food and energy still very tame. |
| China | Caixin Man. PMI (We) | -0.2 to 50.4 / -0.1 | Tariff talks with U.S. pushed back until after midterms when China may hold better cards. |
[private]gmw_0921[/private]
Research Studies
DE | Sinai Economic and Market Perspectives | Seeds of A Sovereign Debt Crisis Planted – 02/03/21
[private] [/private] Seeds of A Sovereign Debt Crisis Planted Allen Sinai* The U.S. and Global economies have undergone a fiscal/debt revolution of huge import from which there will be no turning away! The main catalysts read more
A TAILORED APPROACH
We know investment professionals have specific needs, in terms of type and method of information support.
meet
allen sinai
& the team
