Global Macro Views

Running an economy with a market system or governing a country with checks and balances is hard to top as a principle of design. Prompted by action (and threat of more) on trade sanctions by President Trump, apparent worries about the global trading system are off the high end of the chart. News of high-level administration personnel separations (both voluntary and forced) clutter national headlines. And the supreme leader of an impoverished but nuclear-armed state traveled back and forth from Pyongyang to Beijing in an armored train to talk, perhaps, about summit meetings on arms control that subsequently were on, off, and on. Enumeration may help. Google web searches for "nuclear warfare," "tariffs," and "US government," with each normalized to 100 for its own maximum interest, are shown in the chart. The high-interest readings all cluster of late, hitting peaks in worrying succession.

Still, the world reliably turned on its off-centered axis. Global equity markets traveled a rocky road, and their volatilities were volatile. On net, the S&P 500 Index® is off on the year but remains substantially higher than one year ago; its implied volatility is high in its five-year range but is not so forbidding further back than that. Financial conditions remain accommodative in the US and some other advanced economies and only recently moved barely to firm in the euro area.

US economic data mostly ran stronger than expected, and the list of policy stimuli is lengthening. There may be a drag from economic policy uncertainty, but the known headlines of tax reform, budget expansion, and regulatory relief have an obvious and material heft.

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