Trip Around the Globe | September 7, 2018

It was a busy week, with data from across the globe impacting markets. Here is a trip around what happened.

Tariffs, of course…

Tariffs did not happen last week! The White House was able to impose $200B in tariffs on Thursday but has yet to pull the trigger. The potential of tariffs has sent China’s markets lower even without action from Washington.

Job market strength

Unemployment was unchanged mainly due to workers leaving the workforce, but wages increased more than expected. As employment has moved to a ‘full’ status, we see more job seekers leave the market with the lack of viable job opportunities. That being said job openings are high, however they don’t appear to be aligned with the available skill sets.

NAFTA, kind of, but not really…

Mexico is on board with a revised version of NAFTA, but Canada is a different story. Two weeks ago, it looked like it was not going to happen, however this last week they moved closer to an agreement… but there is still a gap to be bridged.

Italy Debt Crisis…

So far this year Italy has represented a risk to the European Union (EU). After forming a decidedly anti-EU government, fears have increased that they were going to break spending limits in order to start a fight with the EU that would ultimately lead to them leaving the Union (AKA Italeave). Italy vowed last week to keep their 2019 budget below EU expectations. This created confidence across the region and brought Italian interest rates down.

Japan’s balance sheet, a point of concern?

Over the last several years Japan has been purchasing bonds, and ETF’s at a fever pitch. These purchases are about to bring their balance sheet to a point where it exceeds their GDP, their ability to pay debt. This is concerning in and of itself, but more concerning is what they would do next. Should we see a recession in the next several years their means to combat it would be in question.


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