Time will tell whether this Carrier deal was just a symbolic line in the sand, or whether it is a sign of future government interventionist policies which will ultimately backfire. In the long run, the less government, the better.
With the Italian referendum now in the rearview mirror, the market's attention focuses on this Thursday's second most important event, the ECB meeting on Thursday. Here are the key questions the market will want answered.
Will “Trumponomics” change the course of the U.S. economy? We certainly hope so. It will be better for us all. However, as investors, we must understand the difference between a “narrative-driven” advance and one driven by strengthening fundamentals. The first is short-term and leads to bad outcomes. The other isn’t, and doesn’t.
How would you describe the social mood of the nation and world? Would anti-Establishment, anti-status quo, and anti-globalization be a good start? These are all characteristics of the long-wave social-economic cycle that is entering the disintegrative (winter) phase.
December 5, 1996: “Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?"
Matteo Renzi met with Italian president Sergio Mattarella to discuss the terms of his resignation. According to Ansa, Renzi's departure may not be as clear cut as some had expected, and as Ansa reports, Renzi may delay his resignation following a request by the president to hold the post until the Senate Budget Law is passed,
While investors are focused on Italy, Bloomberg's Mark Cudmore warns that another Mediterranean country is poised to grab their attention very soon. A currency crisis in Turkey is rapidly deteriorating, setting the stage for dramatic and unscheduled central bank action.
"I don’t think anybody in the administration is looking for quote-unquote tariffs, but I think they are a cudgel if you will to lay out there if we can’t get the trade deals to be right-sided to now benefit the American people.”
"I can’t justify any of this. The lesson investors are getting is that everything is a buying opportunity and you need to not miss the boat. Brexit? Bullish. Trump winning the election? Bullish. Italy saying no to the referendum and the Prime Minister handing in his resignation? Bullish. Heck, all we need is the entire Belgian banking system to go kablooey and the S&P 500 will be at 3,000 by Christmas Eve."
"The environment remains uncertain with a number of potentially frosty developments. The result of the constitutional referendum in Italy is a harbinger of renewed turbulence that could spill over from the political arena to the economy – with Europe particularly endangered."
While the market overcame its initial scare following yesterday's counter-establishment Italian referendum vote, and European stocks proceeded soar in the overnight session by the most since Trump's presidential victory, what happens next in Italy is largely unknown. What follows are Goldman's snap thoughts on the Italian next steps.
“Right after OPEC, U.S. producers were very active hedging," said Ben Freeman, founder of HudsonField LLC, a boutique oil merchant with offices in New York and Houston. "We are going to see a significant amount of producer hedging at this levels."