In this latest issue of my weekly podcast, I look at what's keeping the equity bull market driving forward. It's largely momentum, but there's also the impact of news stories (e.g., China deal signing) that seem to confirm the favorable economic narrative. Additionally, the fallout from the Iran conflict resolved itself favorably from the market's perspective. Last week, everyone was beginning to wonder where Trump would draw the line. Now everyone knows. That put leaders and markets at ease.
Economic news in the U.S. was mixed. On the plus side, the ISM non-manf indicators for Dec came in stronger than expected. On the negative side, factory orders disappointed once again. The more intriguing and surprising part of the NFP release was the rapid decline in wage growth. With these new wage numbers maybe, we should press pause on the inflation theme…
Abroad, elections send clear messages. Taiwanese President Tsai Ing-wen won her re-election bid in a runaway victory. The Hong Kong protests strengthened Tsai’s popularity and laid to rest any hope that Taiwan might accept China's "one nation two system" offer. In Italy, Matteo Salvini is looking good in the polls. If Salvini’s Lega party wins in the next regional election (January 26), some predict that support for the ruling Democratic Party coalition could collapse, which would require a new general election.
Macron remains locked in a bitter stalemate with trade unions. What's stunning is the contrast between the fury of the protesters' rhetoric and the mildness of the reforms Macron is attempting to enact. If this is how a major European nation responds to such a predictable challenge--namely the aging of its population and the economic burden that imposes--how ready are they to take on nearer-term sacrifices for less certain goals?
Global public mood is turning against those who exercise political power. Starting with the riots in Hong Kong, protests have arisen across the world. What's causing it? A global wave of authoritarian populism. Where this wave is moving rapidly, it is triggering a backlash. Where it is moving slowly, it is triggering calls for more action.
Mortality rates among nonelderly adults have been rising. U.S. life expectancy has been falling for the last three or (possibly) four years. A recent JAMA report has put the blame not on the elderly but instead on nonelderly adults age 25-65. What exactly is driving mortality increases? Causes range from drug overdoses to heart disease. This abysmal longevity performance has coincided--ironically or tragically-- with a vast acceleration in U.S. healthcare spending.
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