The Market Expects the Fed to Do Its Duty

Author: , Post Date: June 15, 2019

Excerpt from article,

The Market Expects the Fed to Do Its Duty

by John Authers
June 14, 2019

The market expects. President Donald Trump’s threat to impose tariffs on Mexican imports has come and gone, but the market remains convinced that the prospects for the Federal Reserve have changed utterly in the last two weeks. If the fed funds futures market is to be believed, the odds now favor three 25 basis point cuts between now and the end of the year. Nobody gave such an outcome the time of day until a few weeks ago



“Vincero!” Or, Trump Sings Pavarotti

Finally, a moment of inspiration brought to you indirectly by David Kotok of Cumberland Associates, along with a slightly painful memory. Kotok headlined his latest market missive “Turandot,” after Puccini’s last and arguably greatest —  but incomplete —  opera. It is set in China. The analogy works, Kotok says:

“Why do I start a commentary about China and the Trump Trade War by invoking an opera to serve as a metaphor? The reason is that there is a history lesson.

“Puccini wrote the entire opera except for the final duet. He died on November 29, 1924, before completing the text. Franco Alfano was commissioned to complete the opera, but conductor Arturo Toscanini did not like the result. At the opera’s premiere on April 25, 1926, Toscanini stopped in the middle of the third act and announced to the audience, “Here the opera ends, because at this point the maestro died.” (Source: Richard Russell, executive director of Sarasota Opera)

“The operatic drama underway features Trump and Xi. The setting is China and also Washington. Instead of the three riddles of Turandot, we have tweets back and forth between the US and in China. Sadly, though, the current version is not a comic opera. The closing duet is not yet written.”

It does seem to be a good precedent (Trump used the song at campaign events). More concerning, we lack a Toscanini-like figure to call the whole thing off if the conclusion the two leaders come up with is not to his satisfaction.

Perhaps more sadly, however, the trade war so far lacks any high moment of drama to match “Nessun Dorma” (“Nobody will sleep”), the show-stopping aria from “Turandot” that made Pavarotti famous and became the theme song for the 1990 World Cup in Italy.

(Ed note: On February 10, 2006, Luciano Pavarotti made his final public performance at the Opening Ceremony of the Torino 2006 Olympic Winter Games in his home country of Italy. Watch this interpretation of “Nessun Dorma” – from Giacomo Puccini’s opera Turandot)

Read the full article by John Authers at the Bloomberg website:


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