As we’ve noted on several occasions of late, former FX trader Mark Cudmore has recently returned to the perma-bull fold after a brief sojourn in bear territory late in January.
In Wednesday’s missive, Cudmore tells investors that the risk-off sentiment suddenly gripping markets is “solely a US-driven phenomenon” that wouldn’t matter were it not for the size of the US economy.
But wait. If you actually read all the bullet points laid out below, you’ll see that old Mark isn’t as bullish on things as the first couple of sentences would suggest.
In fact, he’s now back to reiterating something he said earlier this year: namely that Donald Trump has likely done “permanent” damage to “Brand USA.”
So much for “#MAGA.”
Via Bloomberg
The bout of risk aversion is solely a U.S.-driven phenomenon. That economy is large enough to mean this has spillover effects, but don’t suddenly think the global outlook has turned negative.
- Far from it, in fact: The vast majority of major economies are showing solid growth that continues to improve all the time, even as we navigate event risks from European politics and Brexit
- And it’s not like the U.S. itself is at risk of recession —- it’s just that projections for U.S. growth were wildly optimistic and based on fantasies of extremely effective and promptly delivered stimulus. So a bit of realism is finally being factored in
- By the way, this is a recurring theme when it comes to U.S. economists. GDP growth has disappointed start-of-year consensus forecasts in each of the last four years
- Technically, this U.S. equity correction should have some legs in the next couple of weeks. A 5% further fall would be very healthy for the long-term bull market and is long overdue
- Financial markets everywhere might fall in sympathy -— but for many, particularly in emerging markets, this will provide some outstanding opportunities for macro traders
- According to the latest BofAML Fund Manager Survey, investor cash levels remain above the long-term average. That money continues to be put to work in 2017, even if less of it will be allocated to U.S. assets
- Trump’s attacks on free trade and a lack of cohesive economic policy may be doing severe and permanent damage to brand U.S.A., and I frequently reiterate the long-term bearish dollar arguments, but a few weeks of risk aversion shouldn’t prompt panic or concern for the macro investor
