Binary events upcoming

When we look at the markets today we see a few key events that have very different consequences for the markets going into the year end:

  1. EU and Italy.  Who backs down and what can we expect in terms of eventual reactions.
    1. Italy holds firm and EU climbs down:  negative for Euro and for European bonds most likely
    2. Italy caves to EU, positive Euro, positive stocks and bonds in Eurozone we think
  2. China and U.S. G20 meetings
    1. China gives in to U.S. demands, not likely, but positive for risk assets such as global stocks and EM.
    2. China and U.S. hold firm with current gridlock and Trump implements further tariffs in January.  Negative for global stocks, USD positive?
  3. Brexit outcomes
    1. Hard Brexit without clear guidelines for path forward, GBP, UK stock market negative
    2. Brexit agreement with longer term solution to be worked on over time, GBP and UK stock market positive, Euro positive
    3. New referendum:  sideways as market awaits result.

Other things to keep an eye on:

  1. Developments in the global credit markets:  High yield bonds, Investment grade bonds, Emerging Markets in general.
  2. Fed comments on the U.S. economy with USD having been strong and commodities having dropped considerably, may be difficult for them use inflation as reason to hike in 2019.

Will continued company buybacks and dividends start to worry investors in the U.S. equity markets.

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TickerDate OpenedEntry PriceStopTarget PriceCurrent Price
Long US500 CFD20/112676264027502673

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