If Globalism Is The Ultimate Economic Philosophy, Why Is Global Growth Surging With The Return Of Economic Nationalism?

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By: Kent Engelke | Capitol Securities

The government shutdown lasted three days. The markets are now awaiting the approximate 80 earnings reports that are released this week. The dollar fell again and the 10-year Treasury is now trading at the highest yield since July 2014. Oil inched higher after OPEC and Russia said output cuts will continue until the end of year, vowing “cooperation” during 2019.

There are other events that could be of some significance this week including several central bank policy statements (ECB and the BOJ) as well as President Trump’s trip to Davos, the first US president to attend since President Clinton. The Davos conference is regarded as the epitome of globalism and interdependency, the inverse of the economic nationalism the President has espoused. He speaks on Friday.

Speaking of economic nationalism, the US and Britain, and to a lesser extent Italy and the Nordic states, have adopted this millennium-old philosophy versus globalism and multi-polarity. The global economies are the strongest since 2007. If globalism and strong government spending is indeed the pathway to societal riches and robust economic growth, why did global growth not boom during the last seven years? Why is the world in the midst of a tectonic change?

What will happen today?

Markets should open marginally lower even as the BOJ signaled that it was not yet in a position to consider exiting its current monetary policy as its Board voted to maintain its current asset purchase program. Oil is again higher and the 10-year is marginally lower in yield predicated upon the BOJ’s statement.

Last night the foreign markets were up. London was up 0.31%, Paris was down 0.06% and Frankfurt was up 0.60%. China was up 1.29%, Japan was up 1.29% and Hang Sang was up 1.66%

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