Change is in the air as the Fed, BOC and ECB pivot on policy

Weekly Market Compass: Can central banks’ policy shift offset the economic slowdown?

Time to read: 4 min

There is an old Chinese proverb that states, “When the winds of change blow, some people build walls and others build windmills.” In other words, some people embrace change while others fear it. I’ve come to the conclusion that the speed of the change has much to do with how a change is received. Just look at the past week, when we saw abrupt changes in the direction of the wind for central banks, followed by largely negative reactions.

Continue

What trade-offs will the US accept for a trade deal with China?

Weekly Market Compass: Assessing the state of trade, and six events to watch this week

Time to read: 4 min

Two key risks — trade and central bank normalization — have had an outsized impact on global stocks for more than a year (sometimes positive and sometimes negative). This past week saw developments in each of these key issues.

How close are we to a trade deal?

Continue

What lies beneath the Fed’s ‘about-face’ on normalization?

Weekly Market Compass: On the surface, last week brought good news for stocks, but uncertainties remain

Time to read: 6 min

Last week was momentous for one specific reason: The Federal Open Market Committee (FOMC) released minutes from its January meeting, which detailed the significant “about-face” that the Federal Reserve (Fed) has made over the last few months. In my view, the FOMC’s insights, along with apparent progress in US-China trade talks, could enable stocks to move higher in the short term — but I’m also wary of negative implications that could lie beneath the surface.

Continue

Five issues to watch this week

Weekly Market Compass: Key data releases and international tensions could impact global markets

Time to read: 4 min

From key data releases to international tensions, there are five issues that I’m watching closely this week. Before I detail those, let’s review what we’ve learned in recent days that could impact markets going forward:

Five things we learned last week

Continue

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:

Continue

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.

Continue