Imperium Capital Publication

Viewpoint – September 2017

Economic trends globally remained broadly favourable and constructive for risk assets, demonstrated by equity markets realising positive returns for a tenth successive month. Despite this, a number of factors served to disturb markets and spike volatility to the highest levels since the US election. Three events were of particular concern to investors and led to flows into more defensive assets. Firstly, the serious escalation in the North Korean nuclear weapons crisis and increasingly bellicose rhetoric from the Trump administration has risen the risk of military conflict involving the US, China and Russia, potentially leading to dramatic global consequences. Secondly, Texas was hit by Hurricane Harvey, one of the strongest hurricanes ever to reach mainland US, causing immense damage, cost and disruption. Gasoline prices were immediately affected with the hurricane decommissioning 20% of US refining capacity, whilst insurance sector stocks fell steeply. Thirdly, the US debt limit came into light once again, with congress needing to raise the ceiling by 3rd October 2017 to avoid default.

Weekly Digest – 24 September 2017

  • Angela Merkel wins German election
  • Federal Reserve to begin balance sheet reduction in October
  • US President Trump imposes fresh sanctions on North Korea
  • China long-term sovereign credit rating downgraded by S&P
  • Theresa May clarifies Brexit stance in Florence speech

Weekly Digest – 10 September 2017

  • Oil prices rose 2% on the week with Brent at USD 53.9
  • Gold rose 1.9 % to 1347, its third week of gains
  • Risk appetite returns as treasuries retreat, stocks advance
  • Apple set to launch the iPhone 8 and X models this week
  • Hurricane Irma devastates the Caribbean and Florida

Viewpoint – August 2017

So far this year, market trends have been dominated by strengthening economic activity in Europe and Japan, continuing growth in the US and Asia, and subdued inflation. Amidst this backdrop, markets have generally been benign, characterised by strong equity performance and stable bond markets. These trends continued into July, with equity markets again producing the best returns, led by emerging markets, whilst bond markets progressed with credit and highyield bonds outperforming government bonds. Volatility remained extraordinarily low with the VIX index reaching all-time lows. Perhaps the most notable feature of the month was the further slide in US Dollar, down 2.9% on a trade-weighted basis during the month and 9.1% year-to-date, moving to levels of early 2015. Oil was also a major mover during the month, forming a sizeable recovery with Brent Crude up 9.9% during July, reducing its year to date fall to 7.3%. The partial recovery of Brent crude was triggered by Saudi pledges to cut exports together with the first signs that the shale oil boom in the US is slowing.

Weekly Digest – 13 August 2017

  • Oil prices finished the week -0.6% with Brent standing at USD 51.8
  • Gold was up 2.4% and silver was up 4.9% on the week
  • Global government bond yields continue to fall
  • Bitcoin breaks the $4000 barrier
  • Global markets react to rising tensions between US and North Korea

Weekly Digest – 30 July 2017

  • US GDP growth rebounds from disappointing Q1 growth
  • Federal Reserve indicates imminent balance sheet normalisation
  • US Senate begins healthcare legislation debate
  • Brent crude rises 9.3% following Saudi export cuts
  • Greece returns to the sovereign debt market after three year hiatus