U.S. and global governments and central banks face a dilemma.

Note: To see Dr. Coats commodity price charts, click on the download button at end of file.

How do they continually intervene through fiscal, monetary, trade and regulatory policy to sustain their defined levels of global growth in an extended business cycle, which continues to be dominated by varying levels of growth uncertainties without creating larger equity asset bubbles throughout the world?

The current U.S. business cycle expansion began in June 2009. This ongoing U.S. business cycle is now eight-plus years old and counting. Historically U.S. business cycles have averaged five-plus years. The length of an optimum modern business cycle is up for debate, but since this business cycle is now the 3^rd largest in history many are increasingly wondering about the economic, social and political impact of an anticipated U.S. business cycle contraction, which would undoubtedly lead to a potentially dangerous global recession.

The current U.S. business cycle never really had an expansion phase, where robust economic activity turned into an inflationary period. The current U.S. business cycle has been more of a maintenance cycle not an expansionary inflation cycle. In the current business cycle, problematic business deflationary headwinds have continually undermined domestic and global economic activity. Most in the farm business sector can identify with the deflationary business challenges.

Justifiably so, given the chronic slow global growth of the current business cycle, global governments and central banks would like to extend the current business cycle, due to the dangerous economic unknowns associated with a domestic and global economic contraction, which would simply fan the deflationary forces.

Therefore global governments and central banks find themselves trying to have influence into a broad array of currency, bond, equity and commodity markets to minimize deflationary forces impact of economies, consumers, businesses and commodity markets.

To be very simplistic, equity markets more or less globally need a period to consolidate gains before likely moving higher. Through intervention, governments and central banks globally are trying to do their part in engineering a consolidation or corrective period for many U.S. and global equity markets, thus limiting equity bubble concerns.

Some commodity markets near term have benefited from intervention, like copper and base metals in general as can be seen in the accompanying chart pack, while the remaining commodity markets to varying levels have struggled, due to a combination of fundamentals, risk event concerns with the latest being North Korean nuclear concerns, and fiscal, monetary and trade uncertainties.    

What to expect from the markets this week, Aug. 21

Market “Near Term” Snap Shot

In addition to the following “Expanded near Term Market Outlook Considerations for Week Beginning August 21, 2017”

This Week’s Select Summary Considerations:

10-Year US Treasury Yield:

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