Rose-Tinted Outlooks

Editor Andrea Fiano's monthly letter to you, the reader.

JANUARY 2020 | VOL. 34 NO. 1

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As 2019 wound to a close, the US House of Representatives approved two articles of impeachment against President Donald Trump. It is too early to assess the consequences of this historical development, but there is no doubt that 2020 will be heavily impacted by the US presidential election in November.

Nevertheless, at the various economic forecast presentations by brokers and banks we attended last month, we encountered mild optimism: Recession no longer seems a risk in the US or in Europe, the Fed should have interest rates on hold for a while, and economic growth should be moderate but widespread in different regions around the world. Many expect a good recovery for emerging and frontier market economies hurt by the dollar’s strength in recent years.

But politics remains a wild card. Consider the implementation of Brexit, the future of Macron in France, and the road to the White House in the US. Such optimism hardly seems warranted.

Yet the only bearish forecast we heard came from famous hedge fund manager Anthony Scaramucci, who was head of Communications for Trump for 11 days but has since gone back to managing money. Scaramucci, who now supports impeachment of his former boss, recently told an audience of the Italian Business Club GEI (Gruppo Esponenti Italiani) that he has never been “so defensive” in the markets and that the US is “on the verge of an earnings recession” while it deals with the effects of ongoing quantitative easing.

He also argued that “monetary policy creates income inequality” and that this explains recent social unrest in so many countries. This is the topic of our cover story this month, as the debate over the future of globalization has just started and will dominate in the coming years. It is hard to think of alternative approaches, but many countries—the whole world, really—urgently need to rethink globalization.

Andrea Fiano | Editor