The Markets Daily

Boris Johnson is the politician that has managed to dominate global headlines overnight, an impressive feat during a time in which US politics seems to be the focal point. The reason, a threat to break international law by unilaterally changing parts of the Brexit accord with the EU, in a “specific and limited way”.

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It is always interesting to wake up and discover that yesterday was a day of politicking and posturing. The politicking can only be coming out of the US as its presidential elections loom ever nearer.

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Tick- tock or is tech-tock. The clock is ticking on the tech advancement of 2020. Global bourses are in flux with the Nasdaq futures performing woefully in early Asian trade amid uncertainty hanging over tech stocks.

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What goes up must come down – in physics it is gravity that sees this as an inevitability, but in markets, where gravity doesn’t rule, it is investor behaviour, results and economic expectations that both push the market higher, and drive it down.

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The S&P 500 continues its meteoric rise this year. Having fallen from highs (at the time) in February as covid-19 became a reality, to levels last seen in 2017, S&P’s recovery has not been quite as quick as its collapse, but it has still recovered to February levels relatively quickly and has since surpassed these as investors diversify into utilities and materials.

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It is GDP season! A number of economies have already posted their 2Q20 GDP performance, but as we begin the final month of the third quarter of the year, we can expect an increased number of releases of GDP for the second quarter of 2020, not least of which is the South African figure out next week...

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And thus the August lull ends and September marks the southern spring and northern autumn awakening. But what an awakening it has been. In good news, it would seem that a majority of Argentina’s debt holders have agreed to the proposed restructuring taking Argentina out of its ninth default – generally well received by markets, but with a healthy dose of scepticism as for Argentina to avoid the tenth default, it will have to review its fiscal and monetary strategies.

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As we set ourselves to bid an official farewell to winter, it seems that the weather will remind us that spring is a volatile period. August has been a quiet month for markets, but not for news flow. It seems a lifetime ago, but it was the beginning of this month that saw the massive explosion in Beirut, only adding the economic woes facing Lebanon, and no doubt the recovery and rebuilding will take months or even years.

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A quirky play on words or perhaps an obvious take on the market after the Fed’s review of its monetary policy strategy and longer-run goals. Following two-years of consultations, the Fed announced changes to its inflation framework ahead of its September sitting.

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I’m keen on song titles, especially those that remind me of my childhood. Sinatra was another house hold favourite. As Hurricane Laura makes landfall in the US, I’m reminded of the opening notes of Frankie’s 57 classic, “Laura is the face in the misty night”. Said to be the most powerful storm to strike Louisiana, the tempest could result in US$25bn in damage and economic losses, shuttering nearly 3mbpd of refining capacity on the eastern shoreline.

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