Week in Review 8.30.2019

After four consecutive weeks of declines, markets ended August on a high note, with the S&P 500 recording its best weekly gain since early June. The week was marked more by what didn’t happen, any new negative headline-grabbing announcements about tariffs; than what did, a slightly more constructive tone from both U.S and Chinese officials. Without any last-minute deal, recently announced tariffs took effect on Sunday, September 1. As a result, the U.S. will now charge a 15% tariff on an additional $110B of Chinese goods while China will raise existing tariffs on $75B of U.S. goods by 5-10%.As we enter September, historically the worst month of the year for equity markets, investors will largely remain focused on trade, interest rates, and the Fed. Macro economic data will also be closely scrutinized, to determine the extent to which trade tension are impacting the global economy.

In the U.K., new PM Boris Johnson announced, and the queen approved, a plan to suspend Parliament for nearly five weeks, from mid-September to mid-October. On the surface, Johnson’s request was not unusual. A new PM typically makes such a request to provide time for the new government to develop their legislative agenda. What was unusual about Johnson’s request was the length. At five weeks, it marks the longest suspension since 1945. While Johnson claimed that his government simply needs time to develop their agenda, critics cast the move as an attempt to hinder Parliament from blocking a no-deal Brexit, which Johnson favors.