Financial Markets coverage with Bill Hubard, Chief Economist for TRADE.com and Mike Ingram, Chief Strategist for WH Ireland. With the financial markets being so interesting this year, Mike and Bill end the year by discussing the latest in the US, UK and Europe. The one major point that they can agree on is that markets are tired coming to the end of the year. If you look at the price action coming towards the end of the year; 2017 has turned out to be a less problematic year for investors than it was first feared.
Taking a look at the 2 year treasury, it is at its lowest since October since 2007. Historically in financial markets, bonds go up and stocks go down. But in the last two or three years we have had both a strong bond market and a strong equity market. It is a very low volatility market. It is not surprising that financial markets have done quite well.
The current market set-up seems to suggest that a lot of the momentum trading has broken down. Looking back at the year, we saw a lot of US Indices making new highs and trading highly. However the tech heavy NASDAQ did not. This can be blamed to a positive outlook on the Trump tax reform and how it has not been reflected in the tech stocks as it will not be beneficial to them.
The financials have benefited disproportionately, they are far more positive on the market purely due to the tax rate change.
Moving on to discuss the situation with the new fed chair. Mike suggests that looking at the rotation of the regional fed presidents suggests that the new chair will be more hawkish. Powell is arguably more hawkish than Yellen, certainly in terms of regulation. But you have the appointments of Goodfriend, Quarles, who are both are much more dovish.
For the rest of the interview Mike and Bill take a look at the possible number of Fed rate changes? What is going on in the US economy? How will Non-Farm Payrolls work out? They also discuss the situation with Dollar strength. They move on to discuss the UK and Europe situation.
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