Global Turmoil | August 25, 2017

With earnings season all but over, focus has shifted from corporate profits to global concerns across emerging markets.

NAFTA

Relations between the US and Mexico were strained this week as NAFTA talks got underway. Additionally, market’s felt turmoil on Wednesday partly in response to a rally speech where President Trump indicated a government shutdown was on the table if funding for the border wall was not met.

China

The IMF upgrade GDP productions for China, but also increased debt expectations. GDP growth was increased from 6% to 6.4%, meanwhile debt is expected to expand to 300% of GDP.

North Korea

Tensions rose this last week as Japan has submitted to increase their defense spending by $48 Billion. This was in response to recent threats by North Korea to fire missiles in the direction of Guam. Things didn’t get better at the start of this week as North Korea fired a missile over Japan.

Conclusion

The vast majority of the items listed above have wide reaching impacts, but the market thus far has not been one of them. NAFTA concerns could have an impact on GDP and trade, as well as the lost GDP that could be caused by a government shutdown. China runs the risk during a downturn of entering a recession when it carries debt at the projected level. Lastly, North Korean concerns present several considerations, global economic disruption is just one of them. Markets have stayed the course, but who knows how much more they can take before they start to respond to the noise.

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