The markets rallied after FOMC Chair Powell comments Friday and the bulls continue to run today in equities. There is an LSD feel to today – Last Summer Day – as it’s the UK August Bank Holiday and many trading desks are slowly repopulating. The review of the summer will come later but for now we have to remember the time. This gets us to the Childhood game of “What’s the time Mr. Wolf?” played by English colonies the world over – and in the US the wolf is replaced by a fox. Perhaps this is the right angle for understanding today and its limited impact on the bigger stories ahead – there is a tag-you-are-the-wolf quality to markets now.

The tag in FX is TRY as it returns from holiday off 3% to 6.20 its safety breakout zone while the winner so far is KRW up 0.5% with the break of the neckline USD support at 1115 opening 1110 targets. Mexico will be the real focus ahead with NAFTA deal hopes high and the MXN already up 0.6% to 18.79 ahead of the US open. For equities, its Italy as the MIB there falls 0.3% amidst the drama of the EU budget with Deputy PM Di Maio threatening a veto. For Asia, the focus was on China and its adding back of the counter-cyclical factor for fixing the CNY which led to its early gains, helping the markets there, but not sustaining into Europe. Iron Ore is the focus for commodities – dropping 2% and reflecting the growth doubts about China. When you mix this altogether the cycle of where global growth is looks murky and the extension of the “Goldilocks” rally that returned Friday with Powell seems more fairytale than reality.

The risk for today is in the ability for Turkey to hold the line on the TRY without going to capital controls. The shock of that would lead to another round of bank jitters and EM contagion plays. Watching for a dip back to 6 to prove the point with risk that 4-5-6 lead to 7 next.

Question for the Day: What time is it for Germany? The Germany IFO has a cycle clock attached to its report. The cycle of business remains more art than science but measuring current conditions against future expectations usually gets the vector right. The latest report is robust and suggest Germany is extending its boom after a slowing 1H. The news should be taken seriously given the upcoming ECB meeting and the Jackson Hole Powell Fed mantra of gradualism. The ECB maybe setting up the EUR for a larger rally if only the pesky politics of the UK, Italy and Germany itself could be contained.