The US market has been for over 36 trading days without a 1% move (Market Data Group) – the longest streak in history! Practically a somnolent market with a positive bias.
The only two markets that have been quite violent were the ForEX and Gold
This is due to essentially three causes
– President Trump policies have a positive implication, but the uncertainty is at max level and some policies do not make much sense (without the border adjustment tax the US Debt will balloon to over USD25 billion )
-The economic and corporate conditions are really improving and actually Europe is behaving better than ever since 2008 – but the political uncertainties are rising fast.
-The FED is saying that it will raise interest rates, but cannot do it meaningfully as the US Debt would go out of control.
What now?
Usually after pause, there is a brutal catalyst (70% of times to the downside).
As everybody knows the downside, what could be the upside?
Well after the “failed” immigration ban, it seems that Trump is taking a pause to understand what went wrong.
He really wants to fulfill his election promise and he elected President’s Strategic and Advisory Forum composed by the most powerful US CEOs. If he starts listening and push forward the corporate tax cut the market will definitely cheer and market could “gap up” 5 to 8%.
In Europe two things would be seen as positive.
If Macron, French Center Socialist candidate, succeed to create a gap against Le Pen – it would be positive.
If Shultz, SPD German chancellor candidate, starts to poll better against Merkel it would be a positive (Shultz is a pre Europe at any cost*) and with more pro growth and wage increase policies it would be a positive.
*Shultz, as President of the EU, have been heavily criticized at Brexit times as he said the following words
“The British have violated the rules. It is not the #EU philosophy that the crowd can decide its fate”.
Really? Well, the crowd is the people and in democracy the people is the one that SHOULD decide. Or maybe we just found out that the European Union is not supposed to be a democracy. Interesting!
investorpolitico 