What we don’t know is the pace of the global recovery, but what we might know is that there is some measure of forward progress in the US, Europe and China.
The US Jobs Situation Continues to Underwhelm
The US Jobs situation continues to underwhelm along with most US economic readings, making it problematic for the Fed to hike rates in September.
Will the US Fed Act to Get Rates to a Normal, Non-Crisis State?
Evidence over the last month suggests to us that the BREXIT has not had as negative an impact as was expected.
World Economy Remains at a Critical Junction
While the jury remains out on the direction of the US economy, comments from the Fed recently calling for higher inflation targets and more action to stimulate growth probably spark two lines of reasoning.
US Economy Sparking Fears of Preemptive Action from the Fed
With the US payroll report surprising the trade with better than expected results for the month of July, new highs in US equities and anecdotal evidence of a possible bottoming in the Chinese economy (positive Alibaba earnings and a rise in iron ore and copper imports), it would seem like the groundwork has been laid for an improvement in “animal spirits.”
World Economic Condition is Disappointing but Not Beyond Resurrection
Either the payrolls report confirmed that a recovery remains in place in the US, or payrolls are indeed a lagging indicator.
The Fed Passed on Hiking Rates; Commodity Markets Not Impressed
The Fed passed on hiking rates, but the lift to most commodity markets off that news was not very impressive, and this suggests that the path of least resistance is likely to remain down.
Developing Pattern of Weakness in Energy Pricing Weighing in On Commodities
The early July COT spec and fund net long position reading in 20 non-financial commodities, combined with ongoing strength in the US Dollar and favorable US grain production weather, leaves the path of least resistance in most markets pointing to the downside.
Potential For Negative Headlines Ahead
While there might be flare ups off the eventual splitting of the UK from the EU, both parties seem to understand it is in their best interest to minimize the headwinds to economic growth.
The Level of Big-Picture Macroeconomic Uncertainty Is On the Decline
Death and Pestilence off of Brexit has failed to surface so far!