News

Quarterly Review and Outlook – 1st Quarter 2018

If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before

they reach you.” ‐ Calvin Coolidge

The administration’s skepticism on existing trade deals bore teeth in the first quarter,

sparking volatility as investors seek to balance the back‐and‐forth headlines with a steady

flow of positive economic data. Most analysts expect a negotiated peace, but the

president’ sizable authority on trade compels us to consider the implications a trade war.

China’ size obscures the fact that it remains a poor country heavily reliant on U.S.

demand to support its investment‐led growth model. If politics rules out some form of

détente, the “in case of emergency, break glass” option to avoid a negative growth shock

would be currency devaluation. A significantly weaker yuan would have potentially large

repercussions, particularly for emerging market assets.

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