Asset Allocation for September 2018

Debt problems in Argentina and political isolation of Turkey caused national currencies devaluation and selloff of EM countries stocks and bonds.
Exchange devaluation in BRICS countries and other EM markets (Turkey, Argentina, Indonesia etc.) strengthened US dollar position that had a negative impact on commodities prices and international corporations profits. Many American companies see risk of profits decreasing in 3Q through cut in USD revenue from Latin America and Asia.

In September US is ready to implement new tariffs on import products. Donald Trump is geared up resolutely for toughening trade relationships with China and EU. Automakers, farmers and chemistry corporations will feel the main punch from tariffs.

US economy is growing tremendously despite concerns in emerging markets. Investors look at strong US macro data and take FED Reserve possible rate hike in September as an accomplished fact.

Threat and challenges in world markets:
- Trade war between US and China with EU
- Monetary policy tightening by US FED
- Debt problems in Argentina and economic crisis in Turkey.

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