“Politics isn’t wagging the tail – it’s shaking the entire dog.”
These strong words from one wealth manager to CNBC last week capture a hectic first half of trading. They also set the stage for an uncertain second half, where “geoeconomics” looks set to remain a dominant market force.
This week, expect attention to return to monetary policy, as central bankers from across the globe — who have kept their heads down amid political tensions — prepare to speak at the ECB Forum in Sintra, Portugal.
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recent comments will no doubt cast a shadow over the meeting, as he continues to put unprecedented pressure on Federal Reserve Chair Jerome Powell.
Just last week, Trump’s name-calling of Powell ramped up, sparking talk of a so-called “shadow Fed chair,” who could keep an eye on things until taking over as chair next year.
Powell also put the pressure on his monetary policy peers, calling on central bankers to hold steady until they see the impact of trade tariffs: “We are well positioned to wait and learn more about the likely course of the economy before considering any adjustments to our policy stance.”
Europe will need to decide how much it lets the U.S. approach dictate its policy, with ECB President Christine Lagarde opening proceedings in Sintra with a speech on Monday evening.
Expect a punchy tone; her recent op-ed in the Financial Times saw her call for the euro to take advantage of the current environment and “gain global prominence.”
