June – Trade Wars

Politics and trade wars dominated markets in June. The month began with the view that much of the United States’ trade bravado on trade was just a negotiation tactic. This premise found some support after a successful North Korea Summit in Singapore. Developments subsequently began to unwind quickly as:

  • NAFTA negotiations deteriorated;
  • Trade talks with China turned sour; and
  • Political developments in Italy and Germany renewed populist fears in Europe

This geopolitical environment made for ugly headlines even with improving US growth and more central banks beginning to depart from easy money policies. Trade wars played a role in countering Q2 growth, and are making Q3 outlooks more difficult. As a result, many have been hesitant to invest without more information. This act of balancing animal spirits against the risk of delaying to the point of uncontrolled inflation dominates the Q3 outlook.

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