Economic Update

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

2018 shaping up as another good year for investors

– Global growth co-ordinated
– United States (US) tax reform
– Strong jobs growth in Australia

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture

After almost a decade of economic woes around the world, all the major economies are starting to come good together.

China, as we expected, not only stayed strong, it also gathered a little pace towards the end of 2017. The US certainly gathered momentum finishing the year at a rate of 3.2% pa. Even Europe is looking strong but the big surprise is the way that the third largest economy, Japan, has at last put five strong quarters back to back.

When growth is co-ordinated like this it is much harder for any individual country to fall into recession anytime soon.

But the prospects for 2018 became even better after Trump got his tax reform through at the eleventh hour. It is doubtful if analysts have yet fully digested the consequences. It may well be that macro and market forecasts will be revised upwards in the next few months.

Citi produces a ‘surprise index’ for many major countries. It is based on how often analysts’ forecasts are beaten by the actual events. The US index stands at a reading of +73 which is a six year high. The Australian index stands at 10.9! We keep thinking things are better than they really are.

Global growth is likely to keep us well out of recession but we are likely to continue to underperform. Our jobs creation has been strong all year – largely because of immigration. Our unemployment rate stubbornly stands at a moderately high 5.4%

The Westpac consumer sentiment index stands at just above 100 but that is only for the second month this year. NAB’s business conditions and confidence indexes, however, remain consistently strong.

Major share markets did well around the world with Wall Street being the stand-out performer. But Australia didn’t do too badly after a bad reaction to various bank inquiries. The ASX 200 posted growth of over 13% over 2017 when dividends and franking credits are factored in.

There are a number of things to watch out for in 2018. The Brexit negotiations between Britain and Europe are progressing without any major problems so far. The new US Federal Reserve chairman looks set to make two or three rate hikes while our RBA is not expected to move in 2018.

Our Royal Commission into Financial Services might cause some angst, depending how press releases are handled.

The more difficult possibility to assess is Trump’s wish to commence a big infrastructure programme. In the election campaign he was talking about a trillion dollar deal, but that has since been scaled back to 200-300 billion dollars. With tax reform behind him, we should see some movement on this front in January.

The ASX 200 closed at the highest level since December 2007 on the penultimate trading day of 2017 and we see growth of about 5% in 2018 – but that means that the November 2007 peak is unlikely to be surpassed this coming year.

We see strong growth continuing on Wall Street in 2018. But, if analysts revise earnings forecasts upwards in January based on company tax cuts, we might see very strong growth in the first half of the year.

On the commodities front, copper, gold and oil prices did well in 2017. It would be sufficient for our resources sector to have a good 2018 if these prices just hold over 2018.

In conclusion, we see it unnecessary to take on extra risks in 2018 to chase returns. Volatility on share markets was unusually low in 2017, and that is expected to continue for the foreseeable future.

We wish you all a safe and prosperous New Year.

Asset Classes

Australian Equities

Our market was seemingly stuck in a tight range from mid-2017 but then it blasted through 6,000 at last – and it even finished 2017 above that psychological barrier.

The Resources sector led the charge in December to give the broader index a boost of 1.6% for the month.

The Financials sector was down slightly for the year, but there were outstanding double digit returns to be had in all other sectors except for Property, Telcos and Utilities.

The February reporting season is only just around the corner so this is the time for companies to ‘confess’ if they are likely to miss their guidance for earnings. We found analysts have started revising their forecasts in an upwards direction for the last month or two. Therefore, we are expecting a good “report card” in February.

Foreign Equities

The S&P 500 index recorded another positive month in December making it 12 in a row for 2017 and the first time on record! We do not, however, think the market is over-priced by more than two or three percent.

2017 market growth has been dominated by the big tech companies. Some are looking to Amazon to become ‘master of the universe’ by establishing a major presence across a broad array of industries.

The strong Japan economy has supported its Nikkei index to record near 20% growth in 2017

Bonds and Interest Rates

The RBA was on hold again and is unlikely to raise rates before the end of 2018. Indeed, another cut is quite possible before the next hike.

The Fed hiked rates in December making it three for the year. Their so-called ‘dot plots’ show that they collectively expect three more hikes in 2018, but the market has only priced in two. The Fed is unlikely to want to risk too much so two is much more likely than four. US inflation is still below target.

Other Assets

Oil and copper prices were firmly higher in 2017. Iron ore prices were down on the year but staged a very strong comeback returning 36% from the lows experienced throughout the year.

Regional Analysis

Australia

Over 60,000 new jobs were created in November – the latest published data point – and two-thirds of them were full-time. However, the unemployment rate was stuck at 5.4%.

Around 1,000 jobs were created on each day of the year (on average) but it seems, much of this was matched by immigration flows. Price and wage inflation are also stuck at below target rates.

However, we at last got a better than expected growth in retail sales (+0.5% against 0.3%).

The government presented its mid-year report card (“MYEFO”) in December which argues the deficit is better than that which had been previously expected.

China

China has reportedly been spotted exporting oil to North Korea which got Trump’s hackles up. But other than that, there is less reported bad news about China’s economy. Of course, any developing economy starts to slow gradually as it reaches economic maturity.

We do not see China’s economy being a problem for us in 2018.

US

After a bumpy ride, a tax reform bill passed through Congress giving Trump one victory for 2017.

The infrastructure programme could be even trickier to get through, as the size of it will require a public/private joint venture. That means the private sector will have a big say on which projects start first. That will put the Democrats off-side as they always want to lead with the public interest.

If the bill makes some progress in 2018, the US economy looks set for continued growth for a few years to come.

Europe

Greece finally came out of recession in December! While the European Union as a whole still has some problems to work through – notably Brexit – the general mood appears to be positive.

Rest of the World

Japan’s Q3 growth figure was revised upwards to 2.5% from 1.4%.

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

The rally that keeps on giving

– ASX 200 and Wall Street surge

– United States (US) economy stronger than expected

– Japan is still performing strongly

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

Most of the action for this year centres on the end of October and the beginning of November. The US Federal Reserve will announce its new balance-sheet-repair policy, Trump will nominate the new Fed chair, Japan and the UK Central Banks are planned to make big statements. Plus we get the usual US jobs data and the China manufacturing data.

The Big Picture

The year-to-date on the ASX 200 has been quite strong at +8.0% (including dividends but not franking credits) and its October total return was well ahead of the major markets – except for Japan’s Nikkei.

At last our market is on the move but our economy isn’t. Our Retail Sales posted a miserable ?0.6% for the month and inflation was a meek +0.6% for the quarter or 1.8% for the year. Professor Ian Harper – new to the RBA board – stated that he isn’t ruling out a rate cut – and neither are we. Inflation just isn’t strong enough to warrant the rate hike many are predicting.

Our jobs data were not bad, even if the unemployment rate did go up a notch to 5.5%. But we should remember it was as low as 4.0% in 2008 and 5.0% in 2011 after peaking at 5.8% in between.

It is hard to know what impact the citizenship debacle will have on politics but it can’t be good for our economy.

US monetary policy is going through a transition but it has been so well flagged, it is hard to predict more than a modest bout of volatility. The new Fed chair is expected to continue current policy.

The hurricanes had a major impact on jobs as reported at the start of October – a loss of ?33,000. So, as people can get back to work – and there is some repair work in train – we could get a bumper result on the 4th November.

US economic growth for Q3 came in at an impressive 3.0% for the year, with unemployment dropping to 4.2%. The chance of one last hike for 2017 has gone up to 80% – as priced by the market. But the Fed’s dot-plots still show their expectation for rates is still well above those priced by the market for 2018 and beyond.

US consumer confidence just came in at the best read since the year 2000!

Japan is still going strong with its third consecutive month of double digit growth in exports. The world economy is moving.

Prime Minister Abe got re-elected with a ‘super majority’ based on Japan’s growth. He has the power to keep growth policies on the front burner.

Even the UK is doing well. Inflation came in at 3.0% and GDP growth at 0.4%. That should be enough for the Bank of England’s Mark Carney to raise rates at the start of November.

And China continues its strength. CPI inflation was 1.6% and its producer price equivalent (PPI) came in at 6.9%. It wasn’t long ago that PPI was more like ?6%. And the manufacturing index at 51.6 was well above the 50 needed to see continued expansion.

The ECB has vowed to keep stimulus going to at least September 2018. Except for us, the world economy is doing great. At least that means we are getting global support for now. Imagine if the world economy was not as strong?

Asset Classes

Australian Equities

The ASX 200 enjoyed a wonderful October. It gained 4.0% and most sectors enjoyed the spoils. Although Property and Telcos gained strongly they performed well below the average.

As we enter reporting season, new paths may be charted. Bad news is usually drip fed during the prior ‘confessions season’ in the month before. So far it looks like our market can grow into the year end – without any help from Santa.

We see capital gains for the ASX 200 continuing at around an average rate of just above 5% pa. With dividends and franking credits, the total returns forecast creeps comfortably into double digits for the next 12 months.

Foreign Equities

The S&P 500 has not recorded one negative month of capital gains in the last twelve months. Nice work if you can get it. The World (MSCI) index performed nearly as well – just one negative month but only a loss of ?0.1% in August!

As far as FY18 year-to-date is concerned of all of the seven word indexes we track all are well in the black. All parties end sometime so how long have we got to go?

Small negative surprises can come at any time and largely cannot be predicted. However, we do not yet see sufficient over-pricing to expect a correction any time soon. Until bond rates rise significantly, investor’s cash needs a home and equities is the main game in town.

Bonds and Interest Rates

The RBA was on hold again and it is likely to stay that way for some time. There are some chinks in our armour – notably in retail sales and inflation – making rates going down still a serious consideration.

The market expects the Fed to raise rates in December but we think the chance is much less than the 80% currently being priced in. There is nothing in the data to require a move and there is so much going on. We would favour them staying on hold for a while longer.

Other Assets

Oil prices had a strong month after the Saudi Crowned Prince came out in favour of stability in the oil market. Brent oil is back above $60 / barrel for the first time in about two years.

Copper, a bellwether for industrial growth, was up 5.8% in October. Our dollar was down ?2.1% on the month.

Regional Analysis

Australia

Politics continues to muddy the waters as the citizenship debacle and its impact on the government unfolds.

Employment data continued to be solid but there is a lack of other data to justify its continuance. Retail sales have become a real problem. The last ?0.6% followed a dismal 0.0% the month before.

China

Consumer and producer price inflation are solid in China. The new politburo has been sworn in leaving the President with even more power.

US

The remarkable result for the month was the +3.0% growth for the USA. After two big hurricanes, only 2.5% was expected but there was a big build-up in inventories. Is business expecting a big tax-cut fuelled surge?

Consumer confidence was expected to come in at 121.6 so the read of 125.9 really caused some excitement. That’s the best number since 2000!

Europe

Brexit may be a problem but UK data keeps rolling along. The Bank of England looks almost certain to raise rates for the first time in many years when it meets on November 2^nd. Growth was a respectable 0.4% for the quarter but inflation – at 3.0% – is a number most developed nations can only dream of. The top of the range hence start tightening!

The ECB announced its policies for the next twelve months – which is essentially no change. The Catalans (home to Barcelona FC) caused a stir by voting to exit Spain – so PM Rajoy sacked them all! No one can afford splinter groups trying to exit the EU. Scotland and then Brexit were about as much as the EU can handle. It probably means the EU will play even harder hardball with Britain – and anyone else who looks to be dithering on the fringe.

Rest of the World

North Korea seems to be less in the news so the sanctions might be working.

The Japan economy is surging and Japan has re-elected Abe for four more years with a ‘super majority’. That gives him the power to try and change the constitution so he can build a defence force to protect Japan from North Korea.

New Zealand got an unexpected result in its election – swayed by which way Winston Peters leant. Does that mean more instability in the region?

*Ron Bewley (PhD,FASSA) – Director, Woodhall Investment Research

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

It’s been all growth on Wall Street

– United States (US) tax reform

– Australian economy is warm at best

– Japan economy is on fire

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture

The Big Picture The third quarter of 2017 just ended with Wall Street’s S&P 500 index not only posting a positive return – but it posted the eighth successive quarter of growth! Indeed, the last six months were also all positive.

So where did we go wrong? Out market has moved sideways since May in a very tight range. Basically, expected earnings for companies on the ASX 200 just aren’t cutting the mustard. But the growth in earnings on Wall Street has been sufficient to justify their index returns over the last two years.

On top of that, Trump has started to articulate his tax reform package. The details are sketchy at this point but the right noises are being made both in politics and in business.

Our GDP growth came in at a moderate 1.8% for the year which was more or less in line with expectations. We had more strong jobs data but what will come next? The Reserve Bank (RBA) is upbeat. The worry is that they will get too enthusiastic and pull the trigger for a rate hike making the wheels fall off.

Turnbull at least got one win on the energy policy but we need more.

We reported last month that Japan’s economic growth was strong at 4%. This month, Japan export growth ran into double digits for the second month in succession. So good is it that Shinzo Abe has called a snap election. He wants to usher in a big stimulus package and make a more concerted stand against North Korea.

China data over September was a little softer than the previous month but still strong. The new politburo will be ushered in this month for its five year term. The infrastructure highway across Asia and into Europe will put massive demands on steel production – and we are in a position to help. BHP was very vocal and positive last week!

Angela Merkel was returned as Chancellor in the Germany elections – but with a different blend of coalition. Not a resounding success! New Zealand elections were even more wishy-washy.

The one to watch is the UK. Its inflation read came in at a lofty 2.9% – well above the pack. The Bank of England will start tightening soon.

October is going to be very special indeed for central bank watchers. The US Fed has announced that it will no longer buy back all of the bonds that mature. In a sensible and staged fashion, they will very gradually reduce the 4.5 trillion dollar debt to about half of that over a few years.

Most commentators believe that will put upward pressure on long bond rates. There has already been some impact in this direction on the expectation of this ‘balance sheet repair’. That’s all good and necessary. But what will happen at the short end? Will the Fed still hike its fund rate?

It surprised many – including us – that in the latest minutes, the Fed is still planning on one more hike this year (December), three next year and two the year after – down from three. We do not think it wise to hike rates while it is commencing budget repair.

The current chair – Janet Yellen – has her term up in February and Trump has signalled he will announce the next chair in the next 2-3 weeks. Depending on the views of the new chair (or Yellen if reappointed) we could be in for a bit extra volatility to go down with the Christmas turkey. But US growth and tax reform should steer us through any bumps along the way.

Asset Classes

Australian Equities

The ASX 200 was down slightly ( 0.6%) for the month but the index is up only +0.3% for 2017 to date (plus dividends makes a total return of +3.9% including franking credits).

So being in equities for 2017 would have been better than cash but there is a sense of frustration among investors.

Since May we have had the tightest range on record for the index. Of course it will break one day but there are a lot of factors at work. Some have suggested that local super funds buy in strongly at around 5,650 but foreign funds sell at above 5,800.

Such behaviour means that we are living off our rather lucrative franked dividends. Not bad if you can get it.

We think we need three things to change before our market takes another ‘leg up’. First, we need our political system to engage on tax reform and infrastructure. Second, we need the US Fed to clearly articulate its plan for the next year or so. Third, we need the soon-to-be-sworn-in China leadership team to announce its new plans. On this basis it is hard to get excited about potential gains in October but we could get a really good Santa rally – and not because it is that time of year. It is that confluence of events.

Foreign Equities

The S&P 500 was up 1.9% over September. The German DAX was up 6.4% and the Tokyo Nikkei was up 3.6%. So there was a lot of action but it is hard being in the right markets at the right time.

Going forward, it is probably smart to be weighted a little out of Australia and towards Europe and Emerging Markets with a healthy – but not overweight – stake in the USA.

Bonds and Interest Rates

The RBA was on hold in September and will hopefully not raise rates until at least 2019. But some commentators are calling for a hike in early 2018. They must use a different crystal ball supplier.

We expect some volatility towards the end of 2017 as the Fed sorts out its new direction. And there is pressure on the UK to hike.

While we expect volatility, we do not expect a long-run impact on our markets. We have lived in a low volatility regime for much of 2017. If volatility goes back to normal levels, so what?

Other Assets

Oil prices were up about 10% while iron ore was down about 20% over the month. In both cases, these changes are not establishing new trends but correcting previous moves.

Regional Analysis

Australia

While economic data last month came in reasonably positively, the data were not strong. The future could go either way. Recessions and the like are way out of line but slow to moderate growth is possible.

On the other hand, a concerted effort by the government and the RBA could make things happen. But our media seems centred on causing conflict. We need a circuit breaker and one isn’t stepping up to the plate!

China

The China data in September was a bit light on but nothing to worry about. There is always statistical variation. In October there will be a new leadership team to run the second biggest economy in the world.

The Purchasing Managers’ Indexes (PMI) which look forward, were very strong. The manufacturing index came in at well above the ’50 mark’ that indicates strengthening expectations. At 52.4 it was actually at a five year high. The services PMI was even stronger at 55.4 which was a three year high. Not much to worry about there!

China debt was downgraded in September (but so was UK debt). The new massive infrastructure programme is likely to change the world order and we should benefit. But it might take a while for the flow on to take hold.

US

Trump has had no real wins this year but the tax plan might make it. So far there is no real plan but there is enough at least to get his own team on side. To cut the corporate tax rate from 35% to close to 20% would have a massive positive impact. It has to be funded (at some point) but there is lots of wiggle room.

The jobs data were a little bit soft in September but one month does not make a trend. The average for 2017 job creation is the same as the 2016 average.

Europe

Brexit dominates but the noise seems to be subsiding. Naysayers seem to want the UK to fail but the leaders are being measured.

Europe is now so far from the basket case it was a few years ago, it can work its way through this. With the all-important German and French elections behind us we can look to the future. The European Central Bank is unlikely to upset the balance.

Rest of the World

North Korea has seemingly gone quiet after China closed ranks with the West on the recalcitrant North Korea. That will help markets.

But the big ‘Rest of the World’ news must be that Saudi Arabia is now allowing women to drive cars. Hopefully no one thinks that women shouldn’t be allowed to drive but when half of the population suddenly gets a learners permit after many years in the passenger seat, what chaos can follow? Robot-driven cars are needed quick-time.

By Ron Brewley on behalf of Infocus.

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Economic growth improves in key countries
– China economy shows strong signs of strengthening
– Australian employment data continues strength
– Rates on hold in Australia and the United States (US)

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture

There were some notable economic growth numbers released in July. After a few years of declining (but still stellar) growth numbers in China, the latest statistic was back up to 6.9%. The new China leadership team is about to be ushered in and the Chinese know how to throw a party. On top of that, the China Purchasing Managers Index (PMI) came in at 51.4 for manufacturing and 54.5 for services – both in the sweet spot. Throw in 11.0% for Retail Sales and 7.6% for Industrial Output and you have what Keating might call, ‘a beautiful set of numbers’.

Turning to the US, the anaemic growth in Q1 was overshadowed by the June quarter coming in at 2.6%. True it’s not the 3% that the Fed is aiming for or the 4% that Trump was dreaming of. But 2.6% is really solid. Unemployment is low at 4.4% and 222,000 jobs were created in June when only 180,000 new jobs were expected. It is true that wage growth was low at just 0.2% but you can’t have everything all at once can you?

Even Australia was looking good. We had some very nice jobs and unemployment data – against the trend of 2016. For whatever reason, the labour force data are looking better. But the RBA chimed in at the start of July saying that 3.5% is our ‘neutral’ interest rate. That is, rates should be at 3.5% when things are chugging along. Since we are sitting on only 1.5%, there are a lot of hikes in the pipeline!

It was a bit silly to advertise that opinion just now and an Assistant Governor had to come out and hose things down. Retail sales did come in at a biggish 0.6% for the month. We’re not cooking on gas but at least we are cookin’ again.

As we go around the world the United Kingdom (UK) is starting to struggle a little with its latest growth of only 0.3% for the quarter and Brexit looming large. Prime Minister Abe in Japan has gone from rock star status to a meagre approval rating of 29.9% in a few years. The Royal Bank of Canada bumped up rates to 0.75% from 0.5%.

So the dice are still rolling. Fortunes are rising and falling but there seems to be no basket cases anymore and there is lots of good news.

We became aware of a new expression this week. It’s been out but under the radar for a few years. It’s still worth sharing. On asking why stock markets – particularly in the US – remain strong – the new catch phrase is that it is a TINA market. Not as in Turner or Arena, but it is the acronym for ‘There Is No Alternative’. Money has to be invested somewhere when cash rates are so low.

TINA puts a safety net under markets for a while but we must be vigilant for when Tina starts singing.

So where to from her? Trump is floundering but his economy is doing well. The Australian economy seems to have stabilised. To us, it looks like a smooth ride ahead – until we see otherwise.

The current US reporting season has been unusually strong meaning that increases in earnings are supporting recent stock price strength. Can it go on? In a word, yes!

The big Tech Companies are having mixed results but they are looking strong. We should never be complacent but the second half of 2017 doesn’t look too bad at all. Perhaps we all deserve a break after the trials and tribulations of 2008 – 2015.

Asset Classes

Australian Equities

The ASX 200 was flat for the month of July. The Materials sector was the strongest on the back of some very strong commodity price movements. Healthcare took a beating at  7.5% with Utilities ( 5.3%), Telcos ( 4.3%) and Industrials ( 3.2%) not far behind. Financials (+1.2%) put in a creditable performance. A big sector rotation just took place.

Our August reporting season is just getting underway. As always, the companies’ outlook statements will be crucial for the future of our market. We have found some recent softening in broker forecasts of company earnings and dividends. At least that downgrade has resulted in our forecasts for capital gains to be only a tad under the long-run average.

Foreign Equities

The S&P 500 fared a bit better than us in July posting a solid +1.9% capital gain. The London FTSE also did well at +0.8%. Emerging Markets were particularly strong at +4.1% on the rising tide of commodity prices.

Our expectations for Wall Street are for a good finish for the year despite the strong first seven months of +10.3%.

Bonds and Interest Rates

With the “Fed” (US Federal Reserve) on hold again in July, the next chance for a hike is at the September meeting. But most forecasters are not expecting another hike this year. The odds of a rate hike by December are priced in at a little under 50%.

The Fed is widely expected to start its balance sheet repair in September. This amounts to gradually lowering the $4.5 trillion bond debt down to $2.5 trillion over a number of years. Since this policy will gradually raise long rates on its own, there is no reason for the Fed to also raise the underlying Federal Funds rate at the short end.

The RBA kept rates on hold again in July and August. The majority of pundits are expecting the next move to be up but not until at least the middle of 2018 – and possibly 2019.

Our view of needing a cut at home is on the back burner for the moment. We need a little more data to change our call. It all depends upon the next GDP growth number to be posted on September 6.

Other Assets

Commodity prices were on a flier in July. Iron ore was up +15.2%, Brent Oil up +9.8% and Copper up +6.2%. Our dollar was up +3.8% against the greenback.

The volatility index called the VIX was down  3.7% in July. This fear index is around all-time lows.

Since we are a commodity producing and exporting country, the restoration of solid commodity prices bodes well for our total exports and GDP growth.

However, not everyone wins from this sectoral rotation. Healthcare and a number of Industrials names are finding stronger headwinds after a good first half to 2017.

For example, our Healthcare sector is up +13.0% for the year-to-date including the poor  7.5% for July.

Regional Analysis

Australia

Our headline CPI inflation came in at only +0.2% for the quarter or +1.9% for the year. Since the RBA’s target range is 2% to 3%, this read gives the RBA no motive to raise rates anytime soon.

With total employment up around 170,000 in the first half of 2017 – with nearly all of them full-time jobs – we are back on track. During that period, the unemployment rate has been stuck at around 5.6% and wage growth is non-existent.

Europe

The focus in Europe is on what the implications of Brexit are for employment and trade. It will be nearly two years before we find out the full story so we cannot expect much good news from that region in the medium term.

However, the underlying economies are so much stronger than in recent times. We don’t have to waste much energy worrying about Greece and the other ‘PIGS’ countries anymore. Can you remember what PIGS stands for? Those days are gone!

China

The China data have been on a roll for quite a while. Without taking sides, it is hard to conclude after recent data that China is not undoubtedly doing well at the moment. Yes, there are political problems with the US and who would want North Korea as a neighbour – let alone an ally.

But what seems to be forming is a view that China has regained its role as a lead player in the world – as solid and dependable – at least in an economic sense.

US

Trump is hiring and firing quicker than he did on “The Apprentice” – but the West Wing is for real.

The US is facing a number of problems in a month or so but these ‘episodes’ on TV have not stopped US jobs and growth.

We don’t think anyone can reliably predict how this scenario will play out but, as annoying as the tweets and press releases are, the economy is marching on!

Rest of the World

With sanctions on Russia being on the front burner, and the woes of the Venezuelan leadership also up there on many news wires, some instability in oil pricing is likely. Both countries are big exporters.