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What a week! An article from Bloomberg summaries the cycle we’re in:

“Powell Speaks, Trump Tweets, China Reacts, Markets Freak. Repeat”

The stock market ended this week just below where it started courtesy of a weaker session on Friday. But a lot happened from Monday through Friday. Investors were whipsawed between “risk on” (equities) and “risk off” (bonds, gold), following the various dramas of the U.S/China trade war. Currencies were volatile as well. The big winners for the week were gold and U.S Treasuries, the classic safe havens.

Although about to register a slightly positive return on the week, the market receded on Friday as President Trump raised the possibility that a meeting with China on trade might be cancelled. The Dow Jones Industrial Average ended Friday down 0.3% to 26287.44. The S&P 500 dropped 0.7% while the tech-heavy Nasdaq Composite fell 1%. (in USD).

Weekly returns to 9 August 2019
(AUD 5-day return far right- hand column)

Source: Bloomberg

Of course (and who could forget) the week began with a rout Monday after moves from China’s central bank to weaken the Yuan triggered fears that the standoff between Washington and Beijing could deepen. U.S. stocks had their worst one-day drop of the year.

But they turned around the next day after Beijing backed off further escalation in the dispute. The S&P 500 rose through the middle of the week before falling again on Friday.

Aren’t markets supposed to be quiet in Summer?


The market lost 0.4% for the week, but this tame result misses the big story. The trading range was 4.1% including 2.7% in a single day. That’s big.

Or another way to look at it!



  • 10-Year Treasury yield: +4 bp to 1.74%. The global bond rally continues:
    Source: Bloomberg
  • WTI crude oil: +3.7% to $54.50 a barrel
  • AUD/USD: +0.43% to 67.85
  • Gold: slipped less than 0.1% to $1,496.60 a troy ounce on Friday, after reaching six-year highs on Wednesday.
    Source: Bloomberg

The week ahead

Earnings season is winding down

The U.S. earnings season is winding down but there are still important reports from:



Upcoming economic data (U.S.)

In the week ahead, the U.S. will see fresh data on inflation, retail sales, productivity and industrial production. China will publish industrial production and fixed-asset investment numbers. Any of them could move the market.

Source: briefing.com

Charts of the week

1. An acceleration of US economic growth in 3Q?

The resiliency of the US economy is something. Initial unemployment claim data is signalling an acceleration of US economic growth in 3Q, despite more tariffs and tight Fed policy. Data could change in the coming weeks but the ominous sign from the bond market is not showing up yet. ‬

Source: Strategas


2. What’s working in 2H 2019 S&P 500

Alpha (excess returns) coming from high quality, large growth companies. Same as in 1H 2019.What’s not working (and it hasn’t for some time) is Value:


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