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Among Top Themes, Where is the Risk Most Potent: Fed Hike, China, EM?

Among Top Themes, Where is the Risk Most Potent: Fed Hike, China, EM?

John Kicklighter, Chief Strategist

Talking Points:

• A few months ago, the IMF and many market participants counted a Fed hike as one of the greatest market risks

• The potential a theme/event/data has on the market is significantly shaped by market pricing and anticipation

• Where the Fed hike may have seen its leverage curbed; themes like China, Emerging Markets and GDP are untapped

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Over the past two weeks, we have seen a significant adjustment to the potential of a December Fed rate hike. While that doesn't fully deflate the impact potential of this event - nor speculation surrounding the policy path ahead - it certainly does take the edge off the percieved threat. Over the past few months, a range of major players (IMF, World Bank, ECB, etc) counted a Fed hike as one of the great uncertainties that the world's markets faced. As that outcome cut risk and lifted the Dollar, market pricing moved to more fundamentally appropriate levels. Greater ambiguity and complexity is now seen in other stated dominant threats such as China's financial/economic slowdown, Emerging Market capital flows and global growth trends. We discuss the shift in influence and trade potential across themes in today's Strategy Video.

Among Top Themes, Where is the Risk Most Potent: Fed Hike, China, EM?

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