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Divine Intervention?

By September 30, 2015Newsletters

We do not often write about religion or politics on these pages, but through mere coincidence or indirect divine intervention, it appears that some of the political uncertainty that has hobbled our ability to make reliable economic predictions may be waning in the wake of Pope Francis’ visit to the US.

Consider the following:

  • China’s president, Xi Jinping, and President Obama seemed to have (at least in words) crossed some new territory on cyber terrorism. As reported in the New York Times, “Neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.” “This is significant,” said James Lewis, who runs the cyber program at the Center for Strategic and International Studies in Washington. “And it is measurable: We can count the number of commercial espionage cases.”
  • Presidents Putin and Obama had differing views in regards to the root causes of the issues in Syria but agree that something more should be done, and the other major players in the region appear to be getting more fully engaged. Big questions remain as to how resolution might occur, but we believe that low oil prices and their impact on the Russian and Mid-East economies are humbling egos and governments, for now.
  • Regardless of what side of the argument you are on, the deal with Iran is done and this defuses the situation in the Middle East in the near and medium terms, while creating an environment for Iran to cooperate in a meaningful manner in wiping out ISIS and potentially assist in stabilizing Syria and Iraq.
  • John Boehner resigned as speaker of the House, preventing a government shutdown and allowing for some key legislative activity in October; given the pending 2016 election, it is unlikely any long-term initiatives will carry through, but at least this limits potential damage that might be done…or not.
  • Divergent monetary policy philosophies at the FED appear to be lining up behind an extremely gradual increase in rates starting within the next three months.
  • Greece is no longer in the press.

We see this list as indicative of global political risk subsiding to create a more stable platform for increased business and consumer confidence; we believe global GDP growth is taking a noticeable change upward next year, particularly in the second half.

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