As we reach the mid-point for the year, leaving behind a half most would rather forget and looking forward to a half in which central bank quantitive tightening is about to really pick up, Deutsche Bank’s Jim Reid writes that markets spent most of the month of June flip-flopping between constantly evolving trade-war related headlines, as well as digesting the diverging path of a more hawkish than expected Fed versus a more dovish than expected ECB following their respective policy meetings. Learn more
Just days after Beijing officially launched Yuan-denominated crude oil futures (which are expected to quickly become the third global price benchmark along Brent and WTI), Reuters reports China has taken the next major step in the challenging the US dollar’s supremacy as global reserve currency (and internationalising the Yuan) by paying for crude oil imports in its own currency instead of US dollars.
Of the regular 39 assets in our sample, a very impressive 38 finished with a positive total return in USD terms and 36 did so in local currency terms.
The S&P 500 (+21.8%) ended the year with a positive return in every month – the first time this has ever happened in the 90 years of monthly data.
- Oil rose 3.4% on the week with Brent at USD 56
- Gold fell 1.8 % to 1315
- Haven assets decline, global equities rise
- North Korea launches second missile over Japan
Thus far President Trump’s leadership has been long on noise but short on results. He has failed to come up with any legislative wins in his first eight months, despite the Republicans’ control of both chambers of Congress and the executive. This is mostly due to intransigence – the White House has simply not been playing its traditional coordinating role to help bills through Congress.
There are also now rumours of another potential deal with the Democrats on DACA, a program to legalise people who arrived in the country illegally as children and have grown up in the US. Yet to be confirmed, this deal would be in exchange for additional border security funding but surprisingly doesn’t mention the wall with Mexico, a key issue for Trump’s base.
Jeromine Bertrand (CFA) of Momentum Global Investment Management, one of our UK regulated, discretionary fund managers, shares his view. Click here to view.
The last time OPEC (and Non-OPEC) member nations sat down to attempt a coordinated increase in oil prices by cutting production they succeeded… for about three months. Ever since then, oil has been on a gradual declining path, boosted by a surge in US shale output and declining global demand, with WTI recently even sliding sliding below OPEC’s implicit price floor of $50/barrel. Which is why on 25 May, after the failure of the first 6 month production cut, the same nations will try the same exercise, this time looking to cut output for 9 months, and hoping for a different outcome. At least that is the general expectation.
Bank of America’s Francisco Blanch has released a note previewing this week’s OPEC meeting titled “OPEC: extend and pretend“, and which boils down to the 3 choices faced by OPEC: maintain, curb, or hike output.
Oil soared as much as 10% after OPEC approved the first supply cuts in eight years in an effort to ease a record glut and stabilise global markets, but how effective will the proposed cuts be in raising oil prices?
It was a terrible month for the pound and there was plenty of news from the US election to keep investors occupied. That said, suffering sterling did have the effect of raising returns on diversified portfolios, raising the performance on PortfolioMetrix Portfolios to all time highs during the month. Learn more