5 Things to Look at In the Remaining Part of the Year – Introduction
The year is moving fast. In the first quarter, Trump was sworn in as the president of the United States, the Fed raised interest rates, and the stock market reached an all-time high. No major movements were seen in the crude oil market. In the remaining part of the year, investors should look at the following things.
- French Election
Yesterday, France held its first phase of election. Emmanuel Macron and Marine Le Pen won the first phase and will meet two weeks later. After the election results were announced, the Euro spiked to a 15-month high. Macron is a new comer who has not served in government before. He prefers a strong euro. On her part, Marine has been involved in politics all her life. Her father is the founder of the party she ran on. She prefers strict immigration rules, a France exit from NATO, and an exit from Euro. In the next two weeks, new alliances will be formed which will likely determine the eventual winner. As a trader, you should pay close attention to the alliances that form and the poll results. If Marine wins, it will usher in new tensions in the Eurozone.
- German Election
Later this year, Germany will go to an election to elect the new chancellor. The incumbent, Angela Merkel is expected to have the toughest competitor from former European Parliament head, Martin Schultz. Angela Merkel is hugely popular in Germany and she is credited with the country’s economic resurgence. Part of the reason why Germany is so successful is its involvement in the Eurozone. If Merkel loses the election, the Euro will fall as investors study the policies of the new chancellor.
- Federal Reserve
The Fed will play an important role in the remaining part of the year. As you already know, the Fed, under the leadership of Ben Bernanke brought the interest rates to zero following the financial crisis. As the economy progresses, the Fed has started increasing interest rates to slow down the economy. This year, most investors expect the Fed to increase the rates two more times. This is already priced in the market. As a trader, you should pay close attention to the interest rates regime and the words from federal reserve members.
As a trader, you should pay close attention to the geopolitical issues. A few weeks ago, United States, launched missiles in Syria, angering Vladimir Putin. A few days later, the U.S. sent a war ship near the Korean Peninsula, angering the young leader, Kim Jong Un. North Korea has threatened to sink the ship sent by the United States. A U.S. attack on North Korea would without a doubt lead to war in the Asian part. This would interrupt trade, since China is North Korea’s largest trading partner. Japan and South Korea who are United States allies would be attacked by North Korea. Also, it is thought that North Korea has missiles that would reach the United States. Therefore, as a trader, you should pay close attention to these geopolitical issues.
- U.S. Policy
U.S. is the biggest economy in the world. The new administration has promised huge spending on defense, huge tax cuts, deregulation, and a massive investment on infrastructure. Investors are waiting for indications on when all this will happen. This week, Trump has promised to issue a statement on tax relief for companies and individuals. In the remaining part of the year, investors should look at indications on when all this will happen.