Note March 27, 2018 – When Elephants Rumble: The grass gets trampled – an old African adage. Amid wholesale leadership team remakes in all of the United States, China and Russia, the political risk becomes that none can afford to lose face. The Korea, Levant and south Asia regions remain tense. Point and counter point miscalculation potential could escalate from trade to geopolitics. In currency markets, the continued rise of the Yen but less so in the Euro versus the U.S. dollar likely indicates momentum safe haven assessments. Still, it contrasts with the lower debt-to GDP Swiss Franc safe haven. Precious metals also represent a complementary hedge alternate. Worldwide, point moves remain large for many equity indices. Yields on 10 year U.S. T-Note yields have dropped but are not close to 12 month lows. The capital market consensus seems very unsettled. In closing an especially turbulent quarter on both market behavior and fundamentals, convoluted window dressing could also be a forward overhang for portfolios. Amid managing quantitative ease exit from the central banks, despite better global growth and that individually in many countries, capital market valuation expansion potential remains limited and volatility potential elevated. Emergent from its catharsis already, we see Energy as being less vulnerable to sentiment volatility.
StrategeInvest’s independent consultancy operates as Subodh Kumar & Associates. The views represented are those of the analyst at the date noted. They do not represent investment advice for which the reader should consult their investment and/or tax advisers. Any hyperlinks are for information only and not represented as accurate. E.o.e. For disclosures, see www.subodhkumar.com .