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D-PIMS Weekly Market Update - Week of 12th to 18th August 2019

Today’s Monday Update:

Despite Parliament being on ‘summer recess’ there seemed to be a lot of ‘noise’ around Brexit:-

• Last week started with the US stating that it would ‘enthusiastically support’ a no-deal Brexit. Trump said he wanted to see a successful British exit from the EU on 31st October and will be ready to work fast on a US-UK free trade deal. This was despite the head of the Democratic House vowing to block any trade deal if the open Irish Border was affected.

• Scotland’s highest civil court (Court of Session) announced that it will on 6th September, rule on whether or not Boris Johnson can legally ask Queen Elizabeth to prorogue, or suspend parliament, before Britain leaves the European Union on 31st October.

• The US Yield Curve (10 year Treasury yield vs 2 Year Treasury Yield) inverted for the first time in this economic cycle. That is the 10 year yield become lower than the 2 year yield. This event has always preceded a recession and historically the average lag has been 22 months. Stockmarkets have generally peaked 18 months after ‘inversion’, so naturally the news was not taken well by the world’s Stockmarkets. However, in the past they have on average risen 15% in this intervening period!

• There were more Brexit shenanigans when Jeremy Corbyn offered (in the name of stopping a no-deal Brexit) to lead a ‘Unity Government’ if all the opposition and some Tory MPs supported him in overthrowing the Government in a no confidence vote. This was swiftly rejected by enough MPs to make it unviable, however there were calls to support this idea if certain other MPs (Harriet Harman & Ken Clark in particular) could gain enough support. Unsurprisingly they both said they would be willing to put themselves forward.

• Apart from China, major Stockmarkets were down over the week. With the Pound unexpectedly (and some would say undeservedly) strengthening, overseas investments that weren’t hedged, fared much worse. The lower and medium risk D-PIMS Portfolios fared quite well, of course the higher risk Portfolios were more affected, but diversification gave some support.


The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.

Past Performance is no guarantee of, or guide to future returns.

The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.

 

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