Perfect summary of the current market stage

The two critical variables are the US fiscal program that will finally pass, and the extent to which the Fed tightens in response. Investing in the US — and everywhere else, given the weight of the US in the world — will for the foreseeable future revolve around those variables.
If we get a big stimulus and the Fed stays dovish, the market is priced correctly. This is possible but unlikely. In the event of a big stimulus and a strong Fed response — possibly the single most likely outcome — we can expect bond yields to move a lot higher. Stocks would be at some risk. And if Mr Trump fails to deliver as much as hoped in tax cuts (unlikely but possible), while the Fed presses on with three or four rate rises this year, investors in both stocks and bonds should brace to lose money.
From FT´s Long View by John Authers, published this Saturday

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s