© 2018 by Gary Goldberg.

Market Notes

August 20, 2018

 

Stocks are set to pick up where they left off on Friday, as equity futures are pointing to a sharply higher open this Monday morning. Continued optimism that the U.S. and China will make progress in their trade talks and that a prolonged tit-for-tat trade war can be avoided is lifting investor sentiment. The U.S. dollar is also up on the news, as are oil prices, with WTI trading above $65 for the first time since its recent sell-off of more than 10% from recent highs. U.S. Treasury yields are slightly lower ahead of two relatively large three month and six month auctions to be held later today.

European and Asian bourses are mostly higher to start the week, as optimism over trade lifted shares across the board. However, the ongoing Turkish debt and currency crisis is capping gains, especially for Southern European markets whose economies are at somewhat greater risk of contagion than the more insulated and robust Northern European countries. The timing of the Turkish crisis could prove educational for international economists, as the terms of the bailout for once debt laden Greece are set to wind down in the coming months. The process could illustrate further consequences from the unprecedented steps taken by the world to rescue the beleaguered nation after the 2008 / 2009 global financial crisis, and serve as an additional guide for Turkey.

The previously announced new tariffs on Chinese goods are set to take effect on Thursday August 23rd. While some investors are hoping for a reprieve as both sides have reportedly reengaged in talks, most observers doubt that a reversal of course is likely at this stage. However, there is legitimate hope that the talks will prove constructive enough to avoid counter-tariffs by Beijing, in particular in the light of recent criticism President XI Jinping has received within China. Should this occur, it would be viewed as a major policy win for the Trump administration, which has come under significant criticism from all sides about its aggressive trade tactics.

Sincerely,
The GGFS Investment Committee

 

 

Disclosures: This market commentary is written by GGFS Investment Committee and represents the views of Gary Goldberg Financial Services. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.

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