'Twas the Night Before Christmas: A Review and Forecast

'Twas the Night Before Christmas: A Review and Forecast
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Twas the night before Christmas and a nearly full moon
Lit the night sky for Santa, who’d be here quite soon.
As I waited, I pondered the wondrous past year
And all of the things that gave me so much to cheer.

Into compartments all the year’s news did I sort
So I could form, in my mind, this year-end report,
Which would help -- as in so many Christmas eves past --
Provide the backdrop for my year-ahead forecast.

I look first to the markets for critical clues
Because they are quite good at processing the news.
One year ago, for instance, the bull market implied
An economy whose vigor could not be denied.

But now the markets’ message looks a bit muddled
Leaving us all more than a tad bit befuddled.
As investors react to news deemed most deserving
They’ve wrought wild stock market swings oh so unnerving.

Though most data show the economy’s still strong
There’s also a growing list of what might go wrong.
Topping the list is much slower growth overseas
And fears ‘bout a trade war amplify this unease.

Trump says “fair” is key to a free-trade world order
And he wants a big wall to strengthen our border.
While his threats of new tariffs the market despises
His tough talk has too brought some welcome surprises.

A new Mexico-Canada trade deal’s been done
And from China some concessions seem to be won.
But some still think these tactics pose too grave a threat
When foreigners hold so much of our nation’s debt.

’Bout the Fed, President Trump too tweets his concern
But the past teaches lessons he’d do well to learn.
The Fed must be free to set its own policy course
Without seeming to bow to political force.

But now the Fed’s struggling with what words it should use
To guide expectations ‘bout its policy views.
But there isn’t much worth in these semantic debates
’Cause the Fed must let facts show the right path for rates.

So if job growth is strong while inflation stays low
A slow rise in rates would let the economy grow.
But if the now-flat yield curve begins to invert
The Fed would wisely heed this recession alert.

But for now it seems that the future we face
Is for growth to remain at a moderate pace.
And when into my crystal ball I more deeply gaze
I see myriad things that are sure to amaze.

I see scientists harvesting data from Mars
While here on Earth we’re riding in driverless cars.
Five-G internet will be the new wireless norm
And medical advances will health care transform.

Artificial intelligence is such a big thing
I can’t even imagine what all it will bring.
But like most things past science advances have brought,
Improving our welfare is more likely than not.

This future world will be here sooner than later
To make our future Christmas eves even greater.
So with “Joy to the World” I wish all a good night
May the New Year bring you joy and endless delight.

David Resler is the former Chief Economist at Nomura Securities.  A more extensive collection of his thoughts can be found at Top Dog Economics

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