D-PIMS Weekly Market Update - Week of 19th to 25th August 2019
Today’s weekly update:
The last week’s financial news seemed to be dominated by the three usual suspects; Trade Tensions; Fed rate policy and of course Brexit;
• On Wednesday the US Federal Reserve (Fed) released the minutes from their end of July rate setting meeting. This confirmed they will remain ‘flexible’ and open to further cuts if necessary. It also revealed that two governors wanted a bigger cut than the 0.25% delivered. Even though some others wanted no cut at all, the Markets chose to focus on the former (the better news!).
Boris Johnson met with Angela Merkel to discuss Brexit and she appeared to give him 30 days to solve the Irish border problem. This news did push the pound up a bit. Later she said she was just giving an example of what can be achieved in a short time.
• Thursday saw Boris Johnson meet with Macron to try and agree a way forward on Brexit. Macron proved les flexibly than Merkel in repeating that there will be no re-negotiation of the Withdrawal Agreement, but he did say that changes could be made.
• On Friday The US Fed held their annual Jackson Hole Summit. The Chairman Jerome Powel, vowed to act if needed and did not rule out further interest rate cuts this year. This was good news to the Markets, but later in the day China announced trade tariffs against the US in retaliation to Trump’s recent announcements. Matters were then made worse when Trump vowed to retaliate again, threatening to amplify the trade and ‘ordering’ US companies to leave China. He also criticized Jarome Powel (again!) for not confirming there will definitely be more interest rate cuts.
• Over the weekend the G7 conference got underway. Host of the conference, Emmanuel Macron announced that he had held a discussion with Iranian President Hassan Rouhani, who had told him he was open to a meeting with U.S. President Donald Trump. This put Trump on the spot, but Trump did confirm that “it was realistic to envisage a meeting with the Iranian head of government in the coming weeks”. During the conference, Trump appeared to backtrack on the week’s previous rhetoric against China, by saying that “ he believed China wanted to make a Trade Deal and that he was more upbeat about the prospects for an agreement with China than in the recent past”. He also heaped praise on Chinese President Xi Jinping, calling him a “great leader” and a “brilliant man.” This was in stark contrast to Trump referring to him as an ‘enemy’ just a few days earlier!
• Also at the conference, Boris Johnson said that we was prepared to take Brexit talks with the European Union down to the very last minute before the October 31 exit deadline, and if necessary to take a decision to leave without a deal on that day. This was while others in Parliament were plotting to do everything they can to halt Brexit proceedings long before that date.
• The shifting sands did push Markets in both directions, but overall the Markets were mainly flat. Most of the D-PIMS portfolios made progress over the week especially the higher risk Portfolios.
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The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.