G-20 SUMMIT MEETING THIS FRIDAY AND SATURDAY – THE REAL FIREWORKS THIS JULY?

Back

G-20 SUMMIT MEETING THIS FRIDAY AND SATURDAY – THE REAL FIREWORKS THIS JULY?

If you listen to the talking heads, the big news at the G-20 summit is President Trump’s meeting with Vladimir Putin.  Although this meeting is important, the media, in our opinion, is missing the real story.  That story is what will happen between Chancellor Merkel of Germany and President Trump.  Merkel wants to talk about climate change, free trade and immigration.  These are not the key points Trump wants to discuss.  Trump is interested in one thing – increasing business for America.  Many times meetings such as these are just for show as the participants sign documents that were negotiated and finalized months before the actual meeting.  We anticipate this meeting to be different and could be more explosive than the actual NATO meeting.

Trump sees the world as one where countries engage and compete with one another for goods and services, while many in the G-20 see the world as a global community.  To this end, on June 27th, US Commerce Secretary, Wilbur Ross, spoke to the German Economic Council and demanded that Germany start buying raw materials from the US instead of Russia, that it lower tariffs on automobile imports and that it ensure America “obtains a larger share” of European markets.  Couple this with the US recently backing out of several G-20 agreements on globalization and you can see where the beginning of sanctions and countersanctions may have already started to develop between America and Germany.

What does this mean for your portfolio?

While we know any investment we make on our clients’ behalf includes some risk, we want to find those opportunities we believe have the greatest upside potential with the least amount of downside risk.  Any investment on the high side of historical valuation metrics is going to be hypersensitive to negative outcomes such as the implementation of tariffs and sanctions.  Because emerging markets and energy equities are selling at such compelling historical valuation levels, sanctions should have less of an impact on these sectors because the assets are already “cheap”.  Non-correlated assets also offer a wonderful opportunity because their returns are minimally impacted by global trade.

 

Recent News

An Analyst’s Up-close View of the Energy Market

After recently returning from a natural resources conference in Denver, I thought it would be beneficial to share some of my takeaways.  The conference was a mix of listening to CEO’s discuss trends in the market and touring companies in the field.  One of the main focuses of the event…

Read More

Inflation Being Caused by Trucking, Shipping, and Energy Prices

We believe inflation pressures will be here for at least the next two years because of higher costs for shipping goods around the globe.    Both the trucking and cargo shipping industries have initiated new regulations that are, by themselves, increasing costs.   In trucking, it is the regulations regarding  electronic logging…

Read More

Payroll Withholding – Time for a Reality Check

After sweeping tax reform by Congress in December 2017, the Internal Revenue Service (“IRS”) rushed to update the tax withholding tables used by employers and payroll services to determine the amount of Federal income tax to withhold from employees’ paychecks.  With many changes expected to positively impact the average taxpayer,…

Read More