Kuwait: August 9, 2017
JULY 2017: ALAN GREENSPAN WORRIES, THE MARKETS NOT SO MUCH
World growth is on track. The Fed is proceeding with tightening or “normalizing”, if one prefers. Other central banks are getting ready to follow suit, but in a long while. OPEC is attempting to balance oil markets. The Trump administration appears, or is, in disarray. How are markets reacting to all this? Fairly well, thank you very much. Equities, the only asset market performing in line with consensus expectations from earlier in the year, advanced further in July. The equity markets in the US are in fact making new historic highs (Dow Industrials 22,000). This US performance is predicated on strong US earnings, steady growth, a Fed tightening very gradually, deregulation, and potential tax reform ahead.
Global equities continue to rise as measured by the MSCI All Country World Index posting gains of 2.7% in July. US equity markets continued to reach new highs posting gains of 1.9% and 2.5% for the S&P 500 and the Dow Jones, respectively. Despite turmoil at the White House and the Trump administration’s inability to pass major legislation such as the healthcare reform, the equity markets continue to rally. The US Fed left policy unchanged after the July FOMC meeting and indicated that they would start tapering the $4.3 trillion balance sheet relatively soon. In addition, the likelihood of another rate hike this year is near 50%.