What to do, what to think ?

There is no shortage of news items to keep traders and investors alike glued to their smartphones and tv terminals. Donald Trump’s apparent ability to alienate most of the Republican party and the intelligence services in one go, takes some doing, but he managed it at a press conference with Putin. The equity and bond markets muted reaction, where he appeared to back Putin before his own security forces, was possibly surprising.

Theresa May bowed to pressure accepting changes to the customs bill, along with weaker commodity prices appeared to hit UK equity prices on Monday. The flattening US yield curve, although we still believe that this technical rather than fundamental, remains a topic of conversation for economists. As central banks look to tighten monetary policy on the expectation that economic growth is resilient. China, one of the globes major engines of growth, released on Monday its estimate for second-quarter GDP. Growth came in at 6.7%, slightly lower than the 6.8% announced in the first quarter, however, this modest slowdown was expected by analysts.

Trump back in the news as America threatens to increase trade tariffs to 200 billion dollars. The oil price fell 4 pct. on Monday as Steve Mnuchin, in a Whitehouse statement, expressed the view that some importers will receive waivers to continue to import oil from Iran. Commodities across the board were weaker. If that was not enough, we have earnings season in full flow as Netflix shares fall after failing to meet revenue expectations. After the meteoric rise, the shares have had this year that is not entirely surprising to see something of a correction.

The bank's sector appears to be delivering on earnings, that helped offset losses in commodity shares on Monday. Despite all these potential bric bacs the S&P 500 hardly flinched, falling by 0.1%. The Vix index has risen modestly in the past few days, but despite all the potentially disruptive headlines remains closer to the bottom end of a trading range than the top.

Plenty to focus the mind on, and plenty of bricks in the wall of worry. Finally, all this has apparently led to investors pulling back on equity allocations according to the Financial Times reporting on the latest Merrill Lynch fund manager survey.

Posted on July 17, 2018 .