Five ‘swords of Damocles’ hang over markets

Weekly Market Compass: Several critical deadlines are fast approaching

Time to read: 4 min

In Greek mythology, the “sword of Damocles” is a powerful morality tale. King Dionysius is a leader who grows weary of a young sycophant, Damocles, who is constantly extolling the benefits of being king. To teach Damocles a lesson about the pressure and insecurity that comes with leadership, Dionysius allows him to sit on the throne for a day — but over the throne, the king has suspended a large sword, hung by a single hair. Damocles quickly learned what it feels like to be a leader who exists in imminent danger and jeopardy.

I feel as though there are several different swords of Damocles hanging over markets right now, including some imminent deadlines:

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The Fed changes its game plan

Weekly Market Review: The Fed signals a major change in approach at its January meeting

Time to read: 5 min

The biggest American football game of the year was played last night, and for the first three quarters, it looked as if both teams forgot how to score a touchdown. But great teams find a way to win, even when their tried-and-true game plan seems to be faltering.

The Federal Reserve (Fed) has been in a similar place, sticking to its playbook of rising rates and balance sheet normalization, and causing market jitters in the process. But last week, we saw the strongest indications yet that the game plan may be changing. The Fed released its January statement and held a press conference last Thursday. The Fed made it clear that “the case for raising rates has weakened,” citing a variety of factors from a slowing global economy to policy uncertainty surrounding trade conflicts and Brexit, and relatively low inflation.

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Global markets: Eight issues to watch this week

Weekly Market Compass: Key votes and critical data releases could influence the markets as January ends

Time to read: 5 min

Last week was momentous as experts in Davos warned about the dangers of debt, more signs of a European slowdown emerged, and the longest government shutdown in US history came to an end. In today’s blog, I discuss what we learned last week — and highlight eight things to watch during the final week of January.

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Markets grapple with government dysfunction

Weekly Market Compass: Geopolitics threaten to drag down economic growth

Time to read: 5 min

Last week saw government dysfunction on full display in several different countries. While politicians in the UK and US continued to make headlines, expectations for lower economic growth emerged in a report from the International Monetary Fund.

Will the UK crash out or stay in?

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Investor sentiment stays positive despite geopolitical drama

Weekly Market Compass: Investors seem to be tuning out everything except trade wars and Fed tightening

Time to read: 5 min

There has been no shortage of drama across the macroeconomic and geopolitical landscape so far in 2019. However, it appears that investors may be tuning out much of the political theater around them. Which storylines are moving markets now, and which may become more integral to the plot in the weeks ahead?

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