On July 31st, The Federal Reserve (Fed) cut rates for the first time since 2008. In the immediate aftermath of this cut, the U.S. Dollar strengthened.
After a dramatic escalation in trade tensions between the U.S. and China early last week, the Chinese yuan depreciated significantly against the U.S. dollar.
The food fight between the President and the Fed Chair could result in too much easing, and the expansion of valuations beyond sustainable levels. The other food fight: leveraged loan issuers vs buyers. Issuers are winning this fight hands down due.
A slowdown is coming sooner rather than later. Investor should remain cautiously optimistic to environment growth, with a bias on quality and eye on duration.
Trade barriers, once constructed, are not easy to remove and their implementation is likely provide a slower backdrop for financial market performance.
The yield curve inversion, has become a trusted signal of impending economic turmoil due to the close historical relationship between inversions and recessions.
This is a trend that has already begun this year, with major EM central banks already enacting rate cuts, or at least postponing planned rate hikes.
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Michael discusses how he should have taken Trump at his word on tariffs, and the impact of the widening trade war on global growth and equity markets as proposed tariffs approach pre-war levels.