The Week Ahead: 17-21 March

In recent weeks, I have read some relatively troubling comparisons between the geopolitical environment today and that of the 1930s. Martin Wolf (one of the more prominent doom-mongerers at the Financial Times) suggested in his column this week that “this time, the US looks to be on the wrong side”.

I’ll make a more lighthearted comparison, which sprung to my mind when I read that the Australian Prime Minister had described Donald Trump’s steel tariffs as “not a friendly act.” I wonder how many world leaders have aspired to channel Hugh Grant’s version of international diplomacy amid the increasingly unfriendly policies coming out of the US. After all, “a friend who bullies us is no longer a friend.”

Whether you’re looking for lessons from the rise of Nazi Germany or Love Actually, history (and pop culture) offer clues about what we might expect next.

The trouble for markets is that these clues are often contradictory and they’re rarely all that clear. Uncertainty has ticked up another notch this week. And uncertainty gives way to volatility.

Another tough week for equity markets

At the time of writing the S&P 500 is 10% down from its all time highs ($6,130 on 18 February).

Investors enjoyed a brief respite on Wednesday after February’s inflation fell further than expected to 2.8%, sparking hopes that the Federal Reserve might be able to cut rates from 4.25% next week.

But some economists have warned that US tariffs and international retaliations will stoke inflation, suggesting the relief from positive numbers in February could be short-lived.

Tech and high growth companies continue to be the biggest losers in the current sell-off. The ‘Magnificent 7’ have all suffered from their previous high expectations and exposure to countries embroiled in the trade wars. Tesla (NSQ:TSLA) continues to bear the weight of trade challenges and the increasing vitriol surrounding its chief executive. And smaller companies (which were beneficiaries of last year’s tech sell-off) have been caught out by the increasing fears that the US is heading towards recession.

And, as the saying goes, when the US sneezes, the rest of the world catches a cold. European markets have suffered this week as well. The UK remains depressing. Most financial results reported this week have been met with a sell-off in shares.

But onto next week, when it looks like the flurry of results looks like it will die down a little bit. 

Economic Calendar

Companies Reporting