The Fed – so no change. Good summary of the markets that moved after the decision here My personal summary view (as originally shared here): ‘With the Federal Reserve showing greater concern for the global backdrop and pulling down mildly their future expectations for growth and inflation the key conclusion for investors has to be more volatility is imminent as the debate between the need for more stimulus or the start of some policy normalisation continues. For equities the best gains will therefore be made in areas where sentiment is currently low such as emerging markets/commodity focused stocks. Usefully these are both areas which will benefit from a weakening in the US dollar which is now more likely given the more muted forward interest rate cycle’
Nice stat via @DonDraperClone: 'By the December FOMC mtg we will be in the 4th longest business cycle since 1854 yet the Fed needs "more evidence" of a recovery?'
A few related charts I liked...October? December? 2016? Sometime/never? (maybe not the latter).
Either way the profile is being pushed back (chart below via @SoberLook):
Super chart via @JLyonsFundMgmt on a shorter-term fixed interest market to watch:
Migrant situation – headline from the FT: ‘Germany’s refugee stance upsets neighbours…central and eastern European diplomats are complaining about what one called Berlin’s “passive-aggressive” bullying’. Again shows pan-European tensions.
Meanwhile elsewhere, Croatia closed its borders. Facing a influx of refugees from Serbia, officials in Zagreb shuttered seven of its eight border crossings. Croatia is now “absolutely full,” according to government officials.
And yet...look what happened (in Germany) at the time of the break-up of Yugoslavia...
European elections – ahead of the Catalonia vote: ‘it is illegal under the Spanish constitution and it would take Catalonia out of the European Union and out of the eurozone. The Spanish government cannot allow that to happen’ (FT). Meanwhile I noted lots of headlines yesterday akin to ‘Greek election: no-one cares’. A bit silly to take this view given huge Greek debts etc. Latest poll: New Democracy 30%, Syriza 28%. Recall the bonus Parliamentary votes for finishing first potentially very important re coalition building
Ukraine – the country’s Parliament approved an US$18bn debt restructuring deal which included a package of reform measures but also a 20% agreed haircut with creditors.
China – President Xi said slowing growth was the result of the country shifting to a different mode of development, adjusting its economic structure and digesting earlier stimulus moves but acknowledged that the economic slowdown has raised international concern. The economy has huge potential and room for manoeuvre. So why then are 15% devaluationrumours still doing the rounds? Shot across the bow of the Fed?
However in first real September insight, SME confidence…up!
Meanwhile as for house prices:
Aug 70-city New Home Prices, 35 cities up (+4 from 31), 26 down (-3 from 29), 9 flat (-1 from 10).
Japan – the lunacy of Japan: they should do more supply side reform and then they would not have to raise taxes in the first place... (extract from today's Financial Times):