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What investors are interested in the upcoming week
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Loading...US: Monetary Policy, Fiscal Policy and Actual Inflation
Investors have started to wonder if Christmas came early this year. For the moment, both Monetary and Fiscal policy seem to finally be working together. Will Friday's Nonfarm Payroll release bolster or undermine the euphoria?
Higher Interest Rates
Last week, Fed Chief Janet Yellen said she believes the right course of action is to raise interest rates without waiting for inflation to reach its 2-percent target. Her view sidestepped, and rendered moot, an argument within the divided Fed on whether the current low inflation is a short- or long-term issue.
Tax Reform
US President Donald Trump finally unveiled his tax reform plan. It features two pro-business objectives: (1) simplifying a cumbersome tax code, which would save businesses time and money, and (2) cutting the corporate tax rate from 35-percent to 20-percent.
This pro-business growth duo buoyed bulls, who led the S&P 500, NASDAQ Composite and Russell 2000 to new records. A record close before a weekend is especially bullish, as it demonstrates trader confidence. It shows they are willing to remain exposed throughout the weekend, a time during which so many different things could go wrong. That is certainly decisiveness.
Germany: Election Uncertainty Has Begun
The uncertainty of Chancellor Angela Merkel’s diminished power in the recent election has already born poisoned fruit, when Finance Minister Wolfgang Schauble was forced to step down, a sacrifice to coalition negotiations, rendering additional uncertainty to the euro.
Japan:
With his popularity on the rebound after a series of summer scandals, Japanese Prime Minister Shinzo Abe dissolved parliament this week and called a snap election for 22 October. Abe asked for a new mandate to deal with the growing threat from North Korea and said it is urgent that Japan's social security system be rebalanced to cope with the growing number of retirees.
Source: Bloomberg Pro Terminal
Trader I. Ivanov
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