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Is it nearly year end yet?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US equities had a bad day on growth fears, trade fears, and vague fears. US growth slowed this year, but this was exactly as expected (it is amazing how few US growth surprises there have been). Asian and emerging markets offered few major surprises. Europe did disappoint on special factors like German autos.
  • The US Fed faces an economy doing what was expected – but markets overreacting. Economically there is almost no question that rates should increase tomorrow. To fail to raise rates may raise questions about the outlook, or the political independence of the Fed. Either of those reactions may hurt markets more.
  • Chinese President Xi gave a speech talking of three battles (poverty, pollution, and financial services), with an oblique possibly anti-US reference. The big challenges were not really covered. China is the lone survivor of the "curse of BRICs" (only China's share of global GDP has risen meaningfully). But the Chinese growth model of the past three decades will not work in the future.
  • The UK's Sun newspaper declared a national crisis – environmentally friendly teabags split when placed in boiling water. Meanwhile, the interminably tedious process of exiting the EU remains tedious and interminable with a hint of seasonal pantomime.