Updates from our investment partners at Quilters.

By Stewart Bicknell

These are the thoughts of our investment partners at Quilters in respect of both the global economy and the global investment markets, amid the current Brexit situation.

Richard Carter, Head of Fixed Interest Research, Economic Update:

The UK’s glorious Bank Holiday Weekend was bookended by more mixed messages from Donald Trump on trade. Following a predictable retaliation from the Chinese to his latest measures, the President decided to increase the tariffs on roughly $550bn’s worth of goods by another 5%. However, after a couple of days with global leaders at the G7, he talked up the prospect of a deal and raised hopes for further negotiations.

In all likelihood, the G7 optimism will not last long. The US 2s10 yield curve remains inverted and there was little suggestion in Jay Powell’s latest speech that the Fed is about to ride to the rescue by cutting rates aggressively. The German economy also looks to be heading for a technical recession with the IFO business survey falling to the lowest level in almost 7 years.

On the Brexit front, Boris Johnson has arguably managed to change the mood around the talks with the EU and appeared to have a successful G7. However, the facts on the ground have not changed with many of his own supporters committed to a ‘no-deal’ outcome and many of his opponents determined to stop it.

 

Alan McIntosh, Chief Investment Strategist, Market Update:

Another week of markets being at the mercy of the tweet. US stocks fell sharply on Friday after President Trump announced higher tariffs on imports from China, then rallied on Monday when he tweeted that trade talks were back on. It seems that every time the stockmarket has a wobble, he feels obliged to “talk it up” again. For all the preamble over the G7 talks in Biarritz, nothing much happened. The Fed took it in the neck again for not slashing interest rates. “Who is our bigger enemy, J.Powell or Chairman Xi?” So blustered the “leader” of the free world fresh from pulling out of a state trip to Denmark because they wouldn’t sell him Greenland!  History books may omit references to Donald Trump because future generations would never believe what they were reading.

Selling England by the Pound was a seminal album by progrockers Genesis. If it were released today it might well be called “Selling England for 80p in the Pound” after another couple of foreign takeovers of UK companies. Brewer and publican Greene King and Entertainment One, purveyor of Peppa Pig and Grey’s Anatomy, both accepted offers from prospective purchasers last week. These are the latest in a list of companies that have succumbed to overseas suitors recently. A weak pound does make a difference if your purchasing currency is dollars, but one also does wonder whether company boards and shareholders are giving up control of businesses too easily and maybe too cheaply.

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Investors should remember that the value of investments, and the income from them, can go down as well as up. You may not recover what you invest. This commentary has been produced for information purposes only and isn’t intended to constitute financial advice; investments referred to may not be suitable for all recipients. Any mention of a specific security should not be interpreted as a solicitation to buy or sell a specific security.

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