The last two weeks have produced more positive information to support the outperformance of risk markets. For now, an initial deal on the trade front, albeit small, between China and the U.S. has changed the tone of the conversation. Despite setbacks over the weekend, the British pound is trading at its highest level since May on Brexit optimism. It is possible that an agreement with Parliament could happen this week. In addition, the continued expectation for monetary stimulus across the globe should push valuations higher. Included in these stimulus efforts is quantitative easing “light” from the Federal Reserve, even if they don’t want to call it that. Some potential positive news regarding coordinated fiscal stimulus came out of this weekend’s International Monetary Fund meeting. All of these factors, combined with relatively cheap equity markets, set up an interesting, supportive dynamic going into year end.
This week, I will be closely watching the European Central Bank meeting, as it will be the last one for President Mario Draghi, along with the elections in Canada.
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