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Let’s Focus on the Real Deal

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Weekly Update (August 6th – 10th)

Macroeconomic Outlook

Last week was intense with multiple central banks meetings, corporate results and many macroeconomic indicators. Anyway, the final outcome for the markets was mixed.

  • Good in the USA
  • Regular in Europe
  • Bad in China

Overall, after what has been happening in the last weeks, there will three key factors that will influence in the future.

  1. Protectionism from the USA and its relationship with China

Even though the comments from central banks were hawkish and the corporate results were solid along with the macroeconomic indicators, the protectionism concerns have increased with the last comments on tariffs influencing in a negative way the markets.

Trump commented how they were considering raising the tariffs from an initial 10% to 25% on Chinese goods which are worth around $200B.

–          This was what concerned the markets

–          This kind of news is impossible to anticipate

o   The key is that the tone of the conversation does not get worst

o   If this happens, markets will redirect their attention to the fundamentals will put on the side the trade concerns

  1. The second factor is the technology

There were some concerns regarding the drop from Twitter and Facebook. However regarding the reports from Amazon and Apple too, leads to thinking that what is happening is that the markets are turning more demanding and it is not worried about the valuation models.

  1. The last factor is corporate results

Not only from technology companies but from banks too, which they are turning out to be really positive.

–          Within Europe, UniCredit, Commerzbank, Adidas… will report results this week

And is it is as forecasted, it is expected that markets put aside their concerns about the USA-China relationship and focus more on the current expansive economic cycle and the strong results reported from the companies, retaking the bullish inertias.

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