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  • Traditionally, the month of August is the quietest period during the year for markets as traders and investors peel themselves away from their Bloomberg screens and depart for sunnier climes. Unfortunately, social media has allowed this US President to issue market disruptive tweets from the golf clubhouse. The threat of further tariffs on Chinese goods, the retaliatory actions of a weaker Yuan and the cessation of purchases of US agricultural goods has encouraged investors to discuss currency wars and the possibility of a global recession. We take a slightly more optimistic view on the consequences of recent trade war events which we will elaborate on in greater detail in our client conference call scheduled for tomorrow (Tuesday 20th) at 10am GMT.
  • As trade tariffs have encouraged conversations about recession risks, investors have become more concerned with regards geo-political headlines. These encompass a market unfriendly election result in Argentina, protests in Hong Kong and Russia, the collapse of the Italian government, strained relations between Iran and the US and of course Brexit. There is inevitably always some negative geo-political news flow that requires evaluation, it just becomes more relevant for investors when markets begin to show signs of stress.
  • In spite of the House of Commons being on summer recess there remains plenty of media focus on the latest developments in the world of Brexit. The first week in September may see a vote of confidence in the existing government with all political parties readying themselves for a general election before the end of the year. At the time of this note we anticipate a request from the UK for an extension of the exit date with the purpose of holding a general election that to a large extent may become a rerun of the initial referendum.
  • The most recent reading for US inflation (see chart) records an uptick towards the Fed’s target but at the same time provides sufficient support for an interest rate cut at their scheduled meeting of next month. We anticipate Jay Powell will confirm expectations of this cut on Friday with his speech at Jackson Hole.