The Fed is finally in lockdown with no speeches to divert the financial markets. Given the range of opinion currently floating around the FOMC meeting next week, we could say this is probably a good thing.

From its side, the presidential campaign continues to offer little of substance that markets could translate into action. This will likely to be the case until the first presidential debate on Monday, September 26.

That event should offer an opportunity to assess both the electoral prospects of the two candidates and give us a sense of the campaign policy pledges that have been being made on economic matters.

Besides all that, there is one point we got yesterday from the U.S. Census Bureau and that is of economic and political interest, though unappreciated by markets.

The Census Bureau reported an important rise in median incomes in the U.S. last year whereby real median household income increased by 5.2 percent to $56,516 between 2014 and 2015, which was the first annual increase since 2007 and the largest increase in 50 years, but that was nevertheless, still 1.6 percent lower than in 2007 and 2.4 percent lower than the median household income peak of 1999.

One should better not get too optimistic by the wording “the largest increase for 50 years.” Keep in mind we got that fact notwithstanding average hourly earnings have remained lackluster, but because data like average hourly earnings as still applied today, was designed for a bygone era, which is of course that little devil in the detail …

In the modern world with self-employment shifting labor participation levels and other complications, household income is a more nuanced complex measure than simply recording the increase in a weekly pay package.

The apparent reduction in income inequality as revealed in the data may not however feel like a reduction in income inequality, because of inflation inequality.

Moreover, access to credit for lower income groups is not as easy as it used to be, which means that the ability to grow living standards in excess of income is more restricted for lower income groups.

Over in Europe, we got one of the three (3) EU Presidents (No, a single President of the European Union does not exist) Jean-Claude Juncker who is President of the European Commission delivering his 2016 State of the Union saying: “The next twelve months are decisive if we want to reunite our Union. Europe is a cord of many strands – it only works when we are all pulling in the same direction: EU institutions, national governments and national Parliaments alike. And we have to show again that this is possible, in a selected number of areas where common solutions are most urgent. I am therefore proposing a positive agenda of concrete European actions for the next twelve months.”

No, he didn’t say that the EU is disintegrating, but we could say that it looks like we are on our way to just causing that if things don’t change for the better over the short term. If that will be possible is another question.

All this is important for investors who have long-term euro-linked investments as there is a lot that could go wrong over the next 12 months in the EU and more specifically in the Euro area.

By the way, the two other EU Presidents are: Donald Tusk, President of the European Council and Martin Schulz, President of the European Parliament.

Over in Japan, the Nikkei Daily reports that the Bank of Japan plans to retain negative interest rates as a policy option, making it the centerpiece of its future monetary easing program.

The daily also notes: “The shift to negative interest rates as the core of additional easing comes as decreased bond market liquidity makes pumping cash into the economy with expanded asset purchases more difficult. As the prospects of a near-term U.S. interest rate hike retreat, the Japanese yen could appreciate, forcing the Bank of Japan to consider more easing. Establishing the viability of further interest rate cuts would give the bank more options to draw on when necessary.”

Conclusion: Any Fed rate hike, as small as it possibly could be and whenever that comes, will probably disturb many financial markets in expected as well as unexpected places.

Yes, savvy investors better be prepared for it!  

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments. To read more of his articles, GO HERE NOW.