FUNDAMENTAL ANALYSIS
FX
savings to give to shareholders rather than workers. Yes, some workers have received pay rises or bonuses, but the numbers really are modest when compared to the sums being spent on shareholders. Furthermore, the lower half of the income and assets cohorts pay virtually no tax and hold very few assets. Arguably, they will benefit much less from the tax cuts compared to the wealthy, who may choose to simply save their windfalls.
Companies are using the majority of their tax savings to give to shareholders rather than workers
spending? Tis may all happen, but we are somewhat sceptical.
Te early evidence is that companies are using the majority of their tax
If we are correct that when one scratches below the surface the US economy is not performing as well as it should be given all the positives, and the Fed continue to raise rates perhaps four times this year, then we think that concerns over a policy error and economic slowdown will gather later in the year.
Te next couple of quarters are
important for the economy. If growth accelerates, then that may well just galvanise the animal spirits and create a self-sustaining cycle. However, if growth remains sluggish despite fiscal stimulus, then our concerns for a future slowdown will actually increase a notch. Unfortunately, watching the economy is a bit of a waiting game compared to watching price
changes in the financial
markets. But that does not detract from the importance of how the economy performs ahead.
in the period Stewart Richardson Chart 4 - US unemployment and delinquency rate on residential mortgages
Chief Investment Officer RMG Wealth Management
FX TRADER MAGAZINE April - June 2018 27
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