Obviously things economic are not looking so good for the Chinese economy, if the central bank is further encouraging lending to ease the liquidity problem and put further downward pressure on their currency.
Meanwhile, the most recent inflation data in the Euro Area continues to defy the efforts of the European Central Bank. They announce their interest rate decision on March 10 and financial markets expect further easing of monetary policy.
On the other side of the world (and the equation), the world's largest economy has picked up a little and the core inflation data has jumped. The US Federal Reserve's key inflation indicator is the Personal Consumption Expenditure (PCE) core price index:
This is what the Fed has been suggesting in their expectations and will certainly be part of the conversation when they meet on March 15-16.
Adding to the positive side of the equation, the latest data suggests that the consumer (approx. 70% of the US economy) is spending again: January spending was up 0.5%, well above economist expectations (purchases of durable goods, especially automobiles was the key driver).
For the moment, the US economy is growing:
The latest expectations put Q1 growth at a little over 2%.
So, is the US economy going to be able to survive the global economy's continued drag?
Few currently expect the Fed to raise rates at their March meeting. Other central banks are easing or are expected to ease monetary policy. What happens next for financial markets?
Investors have been moving away from risk assets into safer assets.
More uncertainty = more potential for volatility.
Tuesday is webinar day at High Rock and we shall be discussing all of this and more with our clients.
We will post the recorded version of our call at
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist