The trade conflict between the United States and China, and the attempt to ease it, will again attract the attention of investors. This, in turn, may translate into further investors fears about the scale of the global economic slowdown or recession, which we have already seen recently after the sharp fall in stock indices and the rally in the bond market.
Donald Trump's statements are number one topic for markets. Any US President's tweet is able to shake the financial markets and put investors in a very good or very bad mood. Recently, however, Donald Trump has to save the situation more often, because sentiment is rather pessimistic. We will see if the second half of August will bring an increase in optimism.
Optimism for the markets may appear during the annual symposium of central bankers in Jackson Hole, which will be held on August 22-24 in Wyoming, USA. Every year since 1978, the Federal Reserve Bank of Kansas City has sponsored a symposium on important economic issues facing the United States and global economies. The symposium participants are central bankers, finance ministers, scientists and financial market participants from around the world.
This year, the theme of the symposium will be the challenges for monetary policy. Jackson Hole has been important for the investors thanks to statements made by former Fed Chairman Ben Bernanke in 2007-2012. All speeches in 2007-2009 had key importance during the financial crisis, while the speeches in 2010-2012 were the announcements of new QE2 round in November 2010, Operation Twist in September 2011, QE3 in September 2012. In particular, his speeches of 2010 and 2012 gave clear indications about the direct operation of the Federal Reserve.
Currently, due to a situation that is getting out of control, history may repeat itself. Therefore, investors' attention may focus on the symposium, awaiting the Fed's announcement of further measures to stimulate the economy. This seems like a good place to make a pre-emptive move. The symposium and speeches therefore seem to be the culmination of next week.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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