Tariffs & Monetary Policy - Updates: PKI, ALA, PPL, CPX, Preferred Shares
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March has come in like a lion for markets. The prospect of a global trade war, a shifting balance of power in the Cold War and central bankers still prone to raising interest rates, have together cast a shadow over markets. Stable dividend income is a welcomed benefit when capital is under pressure.
Tariffs, and the resulting risk of trade wars puts politics ahead of good economics, and central bankers on alert for inflation. In the Cold War department, Putin has caught Trump flat-footed. New Russian weaponry, apparently able to bypass any known defense system, could target Florida somewhere close to Mar-a-Lago according to Putin. Trump, normally firing back with Tweets, is suddenly out of his league. Trump may win a trade war; the cold war is slipping from his grasp as he readies for the US midterm elections.
Suddenly central bank policy is not quite as simple as it has been since early 2014. The message has basically been the same since early 2014. Talk about raising interest rates 2, 3, maybe 4 times in the next year and then fall short. This same message has been repeated for the past four years. Trade wars provide a different set of circumstances for setting central bank policy. For new US central banker, Jerome Powell central bank policy strategy has quickly become more complicated. Comments this week consider how this might play out.
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