Three market concerns move to the fore

Weekly Market Compass: Exploring the potential for populism, protectionism and pressure on debtors

Time to read: 4 min
Last week brought renewed focus to three areas of concern that I’ve been writing about for some time: populism, protectionism and pressure on debtors. It appears that we may be moving closer to certain outcomes that could be of concern to markets.

Populism

On March 4, Italian citizens will vote in the country’s parliamentary elections. With polls showing there are still many undecided voters, there is much uncertainty surrounding the election. It seems likely that the Five Star Movement — a relatively new party focused on environmental, anti-immigration and Euroskeptic issues — could garner the most votes of any party, although not enough to govern without a coalition. However,

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Good news is bad news: Deconstructing the market sell-off

Weekly Market Compass: ‘Animal spirits’ still matter, but a different animal is making noise today

Time to read: 4 min

Stocks globally have experienced more than a week of tumultuous trading, with the US stock market officially in correction territory. And after being relatively sedate for years, the VIX Index has risen dramatically in recent days, indicating rising volatility. Stocks have moved so far so fast that investors have experienced financial whiplash and are trying to understand what caused markets to change course so abruptly. To put it simply, almost everything that should be a positive for stocks is now a negative for stocks. Consider:

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Lessons from the stock market sell-off

Weekly Market Compass: Investors get a stark reminder of the impact of volatility

Time to read: 4 min

Last week ended on a bad note. The yield on the 10-year Treasury moved up from 2.695% to 2.852% in just five days,1 spiking on the release of the US employment situation report for the month of January. Not only did yields globally then rise, but this brought on the biggest sell-off in US stocks in nearly two years — which then spread to Europe and Asia, putting downward pressure on equities in those regions. As I write this, futures suggest an extension of the sell-off today.

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Are we seeing a shift from global connection to economic protection?

Weekly Market Compass: A falling US dollar worries Europe, and tariffs enter the global conversation

Time to read: 4 min

Last week offered some stark reminders that we live in a very global and interconnected world. Given how interwoven our international relationships have become, the current trend toward de-globalization carries with it many consequences — and protectionism could become the biggest economic risk of them all.

The US dollar declines, to Europe’s concern

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Disruption abounds, but will it matter to the markets?

Weekly Market Compass: The US government shuts down, Germany seeks coalition, and Korea plans a march

Time to read: 5 min

For the past year, I’ve been talking about disruption as a key theme for the markets and economy. During the past week — with the shutdown of the US government, continued efforts to form a coalition in Germany, and an Olympic agreement coming out of Korea — it’s become clear that the theme of disruption remains front and center. Particularly geopolitical disruption.

The US government shuts down — will stocks react?

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Calculating the impact of tax reform

Weekly Market Compass: Will the benefits outweigh the concerns?

Time to read: 5 min

In a number of places around the world, it’s an exciting time to be a taxpayer — or tax attorney. That’s because a variety of countries have brought or are bringing tax cuts to fruition.

At the end of 2017, the US saw the passage of a tax reform bill with many elements to it, ranging from household tax cuts to corporate tax cuts. In France, tax cuts, including a business tax cut, were implemented. The Netherlands and Belgium both enacted tax cuts in 2017. In December, Japan enacted new corporate tax cuts, including ones tied to incentives. And other countries are pondering corporate tax cuts in order to remain competitive with those countries that have already lowered taxes on their businesses.

Not all tax cuts have the same impact

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