mmfnschedule   mmfnschedule



Aug 20 2018

8/20/18 Market Notes

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.



The GGFS Investment Committee