Week of July 27 2018 Weekly Recap & The Week Ahead
“Sometimes the best trade is no trade.” – Anonymous
1. G20 Finance Ministers Release Communique — world financial leaders called for stepped-up dialogue at a G20 meeting last Saturday, but ended the gathering with little consensus on how to resolve multiple disputes over U.S. tariff actions. The communique noted while growth is strong, it’s becoming less synchronized amid downside risks, including financial vulnerabilities, and heightened trade and geopolitical tensions. Ahead of the summit, Treasury Secretary Steven Mnuchin said he “wouldn’t minimize” the possibility that the U.S. will impose tariffs on all $500B worth of goods that the U.S. imports from China. He also discussed trade tensions with the EU. “If Europe believes in free trade, we’re ready to sign a free-trade agreement,” adding that any deal would have to eliminate tariffs, along with other barriers and subsidies.
2. U.S. Economy Grew at 4.1% Rate in Second Quarter — gross domestic product (GDP) — the value of all goods and services produced across the economy—rose at a seasonally and inflation-adjusted annual rate of 4.1% from April through June, the Commerce Department reported last Friday. The Commerce Department said U.S. soybean exports surged in the second quarter, delivering an outsize boon to economic growth even as China shifted much of its sourcing to Brazil in response to its worsening trade relations with the U.S. The export rally likely reflected efforts by buyers to get their soybeans before China’s 25% retaliatory tariffs on U.S. soybeans, which hit in July.
3. Venezuela To Lop Five Zeros Off Currency — Venezuela is delaying its planned currency re-denomination by two weeks to Aug. 20, lopping five zeroes off the refurbished bolivar (instead of three) and linking it to the country’s Petro cryptocurrency. It comes in response to Venezuela’s hyperinflation, which the IMF has said will soar to 1,000,000% this year, throwing the OPEC nation’s already battered economy into a deeper tailspin.
4. Trump Reportedly Wins EU Trade Concessions — President Trump announced at a press conference late last week with the EU’s Jean-Claude Juncker “We agreed today to work together towards zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods,”. The U.S. secured further trade concessions, including the import of more soybeans and possibly some liquefied natural gas, while potential auto tariffs will be sidelined as the two sides launch negotiations to cut other trade barriers.
5. AAII Weekly Sentiment — courtesy of BIG, according to this week’s report, bullish sentiment declined for the second week in a row, falling from 34.66% down to 31.52%.
As bullish sentiment declined, bearish sentiment ticked up from just under 25% to just under 27%.
The week ahead — Economic data from Econoday.com:
