The State of the Markets:
Good Monday morning and welcome back to the land of blinking screens. I hope you are buckled in as we've got a big week for the markets coming. So, before we review the state of the market models, let's take a look at what might shape the markets this week.
The news flow actually started to flow before the week began here in the U.S. We started with the reaction to the G-7 meeting, where there was some drama over U.S. tariffs. Next, Italy's new Finance Minister, Giovanni Tira, said nice things about the euro and that his government would block any conditions that would "push toward an exit." This pushed Italian stocks up 2% and helped European equities perk up.
Next up is the historic summit between President Trump and North Korean leader Kim Jong Un. Both have arrived in Singapore and senior officials are busy trying to iron out differences before the actual summit takes place. At stake here is security environment in Asia but there continues to be concerns about what the term "denuclearization" means to both sides.
Then the fun with the Central Bankers begins. First up is the U.S. Federal Reserve. Jay Powell's gang begins its two-day meeting on Tuesday. Just about everyone on the planet expects a 0.25% rate hike on Wednesday and another at the September meeting. However, the real question is about what happens after September. As such, market players will be listening for clues about the possibility of a fourth rate increase in 2018 and what Powell & Co. have planned for next year.
On Thursday, it's Super Mario's turn in the spotlight. No one expects the ECB to make any changes to its monthly QE ...