Are Markets too Optimistic on the Fed, China, and Brexit? — MM #186

After a dark December, markets have become calm and optimistic about everything. Is this positive sentiment justified? We examine the three key topics: the Fed, Brexit, and China’s economy. 

  1. Fed: Markets have discounted a rate hike this year and even see a rate cut. They may have gone too far as a mix of inflation, job gains, and other factors can push Powell and co. to raise rates at least once. The next meeting is critical.
  2. Brexit: The clock is ticking towards B-Day and the default is a hard Brexit. We examine the options and look for the “panic moment.” The pound may be too calm.
  3. China: The world’s second-largest economy is slowing down and offers some stimulus amid growing debt. Is it enough? Trade wars and savings are not helping.

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