By Cees Bruggemans
The US economy is expanding slowly, with a slowing energy sector an important headwind. But what next? Tales of the unexpected?
US industry seems more likely to find answers to own tightening capacity by going elsewhere in the world (importation) with so much resource slack everywhere offering competitive pricing rather than in raising its US prices or measurably expanding capacity in the US.
A stronger Dollar also appears set to reinforce this tendency, and to weaken the pace of output growth for US industries participating in the tradable goods sector.
It seems the Fed’s concerns about inflation are probably overblown when it comes to prices being driven by US capacity constraints. US industry breathes globally….
The dovish tone of the Fed January statement released yesterday indicates the extent of uncertainty about what comes next. It pushes out the start of US interest rate hiking, even beyond September.
This, along with any Greek resolution in Europe, is likely to bolster bond, asset and risk markets anew. Rand-friendly. Positive all round for SA.
