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AUTHOR: Jason J. Roque, CFP®, APMA®
TITLE: Investment Adviser Rep – CCO TAGS: TRADE, STOCKS |
Developed economies grew in synchrony last week. The unfortunate news is that it had much to do with… you guessed it, trade talks…
US-China
Trade talks were tumultuous over the last week. The US indicated they were going to advance with tariffs September 1st and many feared a retaliation from China. News broke before Monday that trade talks were back on between the two powers, however, little details were available. Truly most days last week were swayed positive or negative (mostly positive) on rumors regarding trade advances.
US-Japan
During the G20 summit last week, Japan and the United States came to a loose framework on trade involving automobiles and beef. It is unclear when further meetings will occur to iron out the details. What is known is that a deal is expected imminently.
UK-Eurozone (EU)
Brexit is its own trade negotiation. By leaving the EU, the UK is forced to renegotiate its trade arrangements with the block. This is the issue that has dragged out their exit since June 2016. In recent news, Prime Minister Johnson has obtained permission from Queen Elizabeth II to shutdown parliament from Mid-September to Mid-October. This will reduce the time for challenges to a new Brexit deal, or potentially a ‘no Brexit’ deal. This also increases likelihood of a no confidence vote by Parliament leading up to the October 31st deadline.
Conclusion
Not all the trade news was good or bad. It just was. The unfortunate thing with trade is it can change in a night and has done so for several years. The longer trade disputes carry on, the less confident businesses will become, and the more capital will remain sidelined. This has been the case, as economic performance has eroded over the last 12 months. Trade deals, fiscal stimulus, or monetary stimulus would go a long way towards steadying the hand of corporations not willing to participate.
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