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072318 CGI Commodities & Currencies Strategy Update

Global macro & geo-political commentary

 

Short-term political concerns remain elevated. Proposed US tariffs against Chinese goods to be implemented in two months were increased again to products valued at  USD 500 BN. NAFTA negotiations remain on hold and are unlikely to resume until after the US mid-term elections in November. In addition, US mid-term election political rhetoric has started to ramp up and is expected to escalate into October.

The US Department of Commerce resides in a limestone colossus near the White House. The complex is named after Herbert Hoover, who is considered one of the most unsuccessful US presidents. Why? In 1930, he signed a customs protection agreement, which escalated the world economic crisis in America, with devastating consequences. 

This irony should not have escaped anyone who sat in the auditorium of the authority on Thursday. Because the occasion was nothing short of a modern version of the Hoover debacle - the protective tariffs on car imports, which threatened the current President Donald Trump in the course of his trade war against the rest of the world.

The US Department of Commerce invited those US business operators affected by these trade tariffs to Washington, manufacturers, suppliers, associations, and governments to hear their respective positions to the issue. Such hearings are routine: a few pros, a few cons, the result is usually fixed anyway, as before with Trump's steel and aluminum duties. 

But with just 5 days five days before the crucial visit of EU Commission President Jean-Claude Juncker to the White House, this meeting became a collective scandal against Trump's commercial madness - and in the end, even the US officials seemed to be hoping for a way out, trumping Trump's tolls. After all, even his own consultants are quite controversial.

Skepticism to trade tariffs became quickly evident, as of the 45 spokesmen of various sectors, 44 turned against tariffs. And even the approval of a lonely US trade unionist was only under strong reservations. There were also more than 2,300 written comments. All but three were negative. 

So we wonder if the President and his helpers, like Wilbur Ross are aware that they are at full throttle to ruin?

 

Now, that we are past the middle of the summer, investors should reevaluate their current holdings, and pay close attention to the seasonal forces that likely will come into play in the short term.

 We are advising investors to invest along the seasonal trends:

 Buy Commodities (Oil; Gold; Metals; Agri’s)