Market Update - August 2018

The third quarter got off to a decent start, with risky assets thriving in the environment of robust global growth and healthy corporate earnings. Encouragingly, trade tensions subsided somewhat after the US and Europe agreed to a ceasefire on new tariffs, US and Chinese authorities signaled a willingness to re-engage in negotiations, and as NAFTA discussions resumed – all of which reduced the risk of a full-blown trade war. That being said, the US focus has reverted squarely back to China – the target of the protectionist agenda since day one. Indeed, after imposing tariffs on $34 billion of Chinese imports, the next wave ($16 billion) is set to go into effect in August, while President Trump also ramped up the pressure and threatened to impose a 25% tariff on $200 billion of Chinese products, suggesting that the global trade debacle remains far from resolved.