April 24, 2017 – Weekly Market Commentary


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Bryony Jones and Hilary Clarke – CNN
Le Pen Faces Macron in Final Round of French Presidential Election

Political newcomer Emmanuel Macron and far-right populist Marine Le Pen will face off in the final round of the French presidential election. French voters reflected similar attitudes to those in the US and Britain by denouncing traditional candidates. Macron has never run for public office, and Le Pen has campaigned on an anti-immigration and anti-European Union platform. Macron has a significant lead in early round two opinion polls. The final election will occur on May 7th.


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Steven Erlanger – The New York Times
Theresa May Calls for New Election in Britain, Seeking Stronger ‘Brexit’ Mandate

Prime Minister Theresa May broke her vow to not call for an early election, calling for snap elections to occur on June 8. Her opponents are branding the call as a verdict on her tough Brexit stance. May’s call for elections is likely strategic. Her Conservative party is polling well, and the elections will likely help May gain parliamentary seats. Extra seats will help her strengthen her political backing during Brexit negotiations.


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Will Martin – Business Insider
Europe’s Economic Renaissance Shows No Signs of Slowing Down

According to the latest PMI data, the eurozone economy maintained its expansionary pace. The market reading of 56.7 came in above the 56.3 forecast. A PMI reading above 50 is considered expansionary and is a leading indicator of GDP growth. The data was significantly influenced by a weaker euro which has helped drive export sales and expansions in manufacturing sectors.



Joachim Fels – Global Economic Advisor – PIMCO
Not So Fast

After spending 57 months below the Federal Reserve’s 2% inflation objective, the headline U.S. index of personal consumption expenditures (PCE) rose by 2.1% in February. Although this looks like cause to celebrate, there are some other key measures that need to be looked at. First, four months above versus 57 months below an inflation target isn’t well-balanced economic performance. Second, core PCE inflation rose to only 1.8%. Lastly, headline PCE inflation is likely to fall back below 2% again over the next few months as oil prices stabilize.


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Rich Miller and Craig Torres – Bloomberg Markets
Fischer Expects Muted Market Response When Fed Trims Balance Sheet

Federal Reserve Vice Chairman Stanley Fischer said he doesn’t see a replay of the so-called taper tantrum of 2013 as the central bank rolls out its plan for reducing its balance sheet. Fischer said that the muted response of investors so far to the emerging details of the plan suggests that the out-sized financial market moves, like those seen four years ago when Ben Bernanke suggested scaling back asset purchases, will probably be avoided.


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Isabelle Mateos y Lago – Chief Multi-Asset Strategist – BlackRock
The Market Implications of the French Vote

Business friendly and pro-European Emannuel Macron is now the clear frontrunner to win the French presidency in a few weeks. His success in the first round of the elections is a tailwind for European risk assets. Macron’s centrist platform should lead to a reduction in the perceived political risk in Europe. The reduction in risk should lead to a greater demand for European risk assets which are also benefitting from a rebound in economic growth.


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Liz Ann Sonders – Chief Investment Strategist
1/2 Full: Seeing Through a Weak Q1

Stocks tend to react more to key rates of change in economic indicators rather than specific levels. Due to this relationship, a run up in positive economic surprises led to higher stock prices, but economic surprises have fallen from recent highs. The decline has led to weaker Q1 GDP expectations, but Sonders says that leading indicators are still positive. Despite the pullback in economic surprises, the outlook for the US economy remains positive and the current expansion is poised to continue.





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