The US economy is growing around2% which is modest: not great, nor terrible. Consumer spending and housingremain in the driving seat while business investment and trade continue torepresent major growth constraints. The US electorate views the economy asdoing quite poorly and therefore attracted by recent populist messages from somepresidential candidates. Domestic risks include a relapse in oil price which,given the recent correlation with other asset prices, could lead to stock pricecorrection and confidence/credit shock, and sluggish wage growth. Internationalrisks include a slowdown in China and/or generalized weakness in EMs as well asgeopolitical risks (ranging from Brexit, the refugee crisis, Middle Eastuncertainty). We foresee a very cautious Fed in this environment.
