A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Credit Suisse’s proprietary measure of investor sentiment shows levels close to full panic, but its strategists see little reason for it,
“Our Global Risk Appetite Index is near panic; our equity-only (relative performance across EM and DM countries) and credit-only (relative performance of US IG sector/rating/maturity buckets) versions are already there… We focus on growth, observing the concrete data consistent with reacceleration. The outlook for second half growth is good unless the trade dispute escalates.”
“SBarlow_ROB CS: “Our Global Risk Appetite Index is near panic” – (research excerpt) Twitter
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Economists at Pictet Asset Management see significant economic risks from an escalating global trade war and lists the countries that would be most negatively affected if it continues. Canada, thankfully, is near the bottom of the list, which is topped by Luxembourg, Taiwan, the Slovak Republic, Czech Republic, Hungary, and Korea,
“A model by economists at Pictet Asset Management in London reckons a 10 percent tariff on U.S. trade fully passed on to the consumer could tip the global economy into a state of stagflation and knock 2 and a half percent off corporate earnings. But equally likely to be affected from the fallout of a full blown trade war are the economies of a number of countries that are tightly integrated into the global value chain.”
“Trade war could hurt these economies far more than U.S., China” – Reuters
“US ‘opening fire’ on world with tariff threats, says China” – CNBC
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Bloomberg cites Goldman Sachs research arguing that trade-related tensions will not affect commodity prices, and Goldman remains bullish on resources,
““The trade war impact on commodity markets will be very small, with exception of soybeans where complete rerouting of supplies is not possible,” analysts including Jeffrey Currie said in the July 4 note. “This is consistent with our economists’ view that the macroeconomic impact of the trade war is likely to be very small,” it said, with added emphasis on the final two words….“Although commodities maintain their status as the best performing asset class in 2018, the month of June was a substantial setback … All of these concerns have been oversold. Even soybeans, the most exposed of all assets to trade wars, is now a buy.””
“Goldman Says Buy Commodities as Clock Ticks Toward Trade War” – Bloomberg
“This is why metals prices are having such a terrible summer” – Barlow, Inside the Market
“Iron ore is starting to buckle, with prices falling to a 3-month low” – Bloomberg
“Debt curbs likely hit China’s second-quarter GDP growth as trade war looms” – Reuters
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Tweet of the Day:
Diversion: “A Daring Plan to Rescue Boys Trapped in Thai Cave Is Starting to Take Shape” – Gizmodo
Scott Barlow