13 Aug Market Update 08/13/2019
The past week has been a roller-coaster for the market. Ups and downs have been fueled by the trade talks with China and that doesn’t seem to be changing anytime soon. The talks that happened this morning between the States and China seemed to be for the betterment of all parties included. That’s not to say that there isn’t still a drop of bad blood in the water, which becomes apparent when we look at currency.
The biggest news of the day is the push back of the tariffs. The 10% increase on $300 billion worth of Chinese goods was supposed to take effect on September 1st. Josh Zumbrun of the Wall Street Journal reports that after a phone call this morning between the President, U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steve Mnuchin, and Chinese Vice Premier Liu He, it was decided that the United States would push back the tariffs to at least December 15th. This was great news for the retail market, especially with the upcoming holiday season. Many of the objects which were to be added to the tariff are large scale consumer goods in the United States such as smartphones, computers, and toys. Along with higher hopes for American agriculture, this was a near necessary boost after the many negative days in our market, and markets abroad as well. Trump stated that it was a “very good” phone call and also made it known that China “would really like to make a deal”. What this will develop into, only time will tell.
Unfortunately not all of the news this week was good news. The Yuan depreciated significantly against the U.S. dollar, which sparked accusations of currency manipulation. Although this was a deliberate act, it does not necessarily count completely as currency manipulation. The Yuen has been trading along with market trends. This has been good for softening the blow of the tariffs on Chinas economy, however it also has raised import costs and deters capital inflows according to Jack Manly of J.P. Morgan.
No matter what, the markets are still volatile on a global scale. A risky Brexit, U.S. equities being down -0.5%, and 10-year U.S. Treasury yields on a downhill run all point towards airing on the side of caution and tactical investing in the time to come. Keep an eye on the markets and your money, and never forget to Plan Smarter & Live Better.