The summer months of July and August are regularly referred to as “silly season”. Everyone of note was on holiday, and the papers were forced into filling their pages with any old stories.

This year, the moniker still stands – but for other more serious reasons. It’s obvious that Trump, Brexit, Argentina, Venezuela and Greece do not take a summer break.

August was a continuation of the news from previous months. The world’s two most powerful economies, USA and China, continuing their trade war as the US imposed an additional round of tariffs on Chinese imports and Beijing inevitably retaliated. Domestically, there were more woes for Donald Trump as more members of his former inner-circle decided they would rather do a deal with the prosecutors than the President.  Impeachment, potentially, took another step forward.

Abroad, two South American countries found themselves in deep trouble and Greece emerged from its bailout programme.


As mentioned in last month’s note, the month got off to a good start for savers as interest rates were finally increased to 0.75% the highest it has been for nearly 10 years. This move had been long expected, with a relatively strong economy, consumer confidence gradually increasing and inflationary pressures all being part of the decision from the Bank of England.

In a slight case of Déjà vu, Amazon announced UK profits of £72.3m, up from £24.3m. As a small business owner, I would expect the tax bill to be around £13.75m if the same rules that apply to me, applied to the Internet giant. I can only assume Amazon pay their accountant a lot more than I pay mine, as the tax bill was a miserly £4.6m – with £2.9m deferred. The treasury’s coffers receiving £1.7m won’t help “Spreadsheet Phil” a huge amount as we approach the Autumn budget. The Chancellor has often spoken of “levelling the playing field” between online retailers and the traditional high street. It’s probably no coincidence then that he has now floated the idea of a specific tax on online sales platforms to help traditional retailers. You could argue that the change in retail habits is part of human progress and that if Mr Hammond had been Chancellor at the start of the 20th Century would he be looking to place a special tax on the first cars to protect horse drawn transport.

Another example of the changing retail landscape was Mike Ashley’s Sport Direct 11th hour purchase of House of Fraser for £90m – about 10% of the valuation from 12 months ago. This is bread and butter for Mr Ashley and he has already locked horns with suppliers over outstanding bills from prior to the purchase. How HOF will look in 12 months’ time is anyone’s guess. Contrary to the negativity around the UK High Street there was a rare vote of confidence with Coca Cola buying Costa Coffee for £3.9bn. The Stone branch is one of my favourite haunts – I just hope they don’t introduce a fizzy latte….

The Office of National Statistics reported that the warmer than normal weather had helped boost the UK’s Gross Domestic Product by nearly 0.4% in Q2 of 2018. This didn’t help the housing market as we saw the biggest house price fall since July 2012. The UK automobile sector also suffered with its profitability being the lowest it has been since 2014. Despite the doom and gloom, there was another drop in unemployment as it came down by 63,000 to 1.36m – the lowest since 1975.

Unfortunately, the FTSE100 took its lead from the bad news rather than the good, finishing down by around 4% – the worst performer on our watch list.


As we approach March 2019 I will write a separate section to focus on Brexit. The papers were full of opinion and debate on the current state of Brexit with it being heralded as “a fantastic opportunity for the UK” or “a potential disaster” depending on their viewpoint. There has also been a lot of talk of the consequences of a “no deal” Brexit. In a way, it is encouraging to hear that this option holds as many problems for the EU as it does for the UK. A “fudge” agreement, allowing both sides to claim victory, may be the way out of the quagmire.  There is flexibility in the negotiations to extend the 2-year notice period beyond the 29th March to allow a temporary extension. How temporary this would be is anyone’s guess. Maybe my September 2028 commentary will start “As the UK’s temporary agreement continues…”

The PMs Chequers proposal has been both supported and ridiculed by various sections of her own party, the subject of a leadership challenge resurfaces. My own view on this is, no one really wants the job at the moment, so the Johnsons and the Rees-Moggs will have to stand patiently in the wings waiting for the right moment to show their cards.


After nearly 7 years, the Greek economy was finally taken off life support as its EU bailout came to an end. You would be forgiven for thinking this is good news, Greece no longer needs to borrow from the EU and the government is running a surplus. Scratch away at the surface and the evidence of the damage this period of time has done to the individuals and the country as a whole, is plain to see. Greece has been left with almost crippling debt and will take decades to clear. 20% of the population live in severe deprivation and the unemployment rate is staggeringly high, especially amongst the young where almost 40% of them are out of work. It is not beyond the realm of possibility the words “Greek Crisis” will reappear in headlines in the future.

After the terrifying scenes of the collapse of the Morandi Bridge in Genoa, the Italian populist government seized on the opportunity to announce a huge €80bn investment in the nation’s infrastructure. This puts it at odds with the EU who have the final say on how a Eurozone country spends its money. It is a high-risk gamble, but something needs to be done to boost an economy which has been virtually stagnant for 20 years.

Like so many other leading indices, both the major European stock markets were down in August, with the German DAX index dropping almost 3.5% and the French stock market falling back by 2%. At the other end of the stability league table the Greek stock market was up slightly by 0.9%.


I always approach this section with a sense of dread at what antics Mr Trump and his Whitehouse have been up to.

This month is no different. The President continued his high-profile initiatives and interventions, doubling the tariffs on Turkish steel and aluminium – and sending the Turkish Lira plummeting as a result – and doing what he described as an ‘incredible’ trade deal with Mexico (although the finer details are yet to be published) and threatening to pull the US out of the World Trade Organisation as he sees it as biased against the US – even though 90% of cases the US brings to the WTO, it wins.

The economy carried on in its ascent with Apple winning the race to become the first trillion-dollar company. Better than expected figures, confirming strong sales growth for the more expensive iPhone models, sent the shares to a new high of $207, enough to see Apple beat Microsoft, Amazon and Alphabet (the parent company of Google) to the trillion-dollar valuation.

In a possible sign of the peak being close, the growth in US employment slowed. Almost 160,000 new jobs were created in July, a big fall from the almost 250,000 created in June. The US is in the midst of the biggest bull market in history, it is inevitable this will have to come to an end at some point.

There was, however, a lot of good economic news, as figures released for the second quarter showed the US economy had grown at an annualised rate of 4.2%.

Not surprisingly Wall Street liked what it saw, and the Dow Jones index ended August up 2% and the S&P 500 nearly broke the 4% mark.

Far East

The trade war between the US and China continued with China suffering the most in August. The main indexes were down (see below) and there was sign of wider consequences as the Hong Kong property market (one of the most expensive and lucrative in the world) suffered as authorities imposed restrictions on credit.


Japan, on the other hand, had much better news. The economy returned to growth showing an annual rate of 1.9%. Toyota added to the Japanese resurgence posting profits significantly above expectations.

The local markets performance reflected the fortunes of the different challenges their respective economies face. China’s Shanghai Composite index was down almost 3% on the continuing worries about a trade war with the US. Hong Kong did only marginally better, falling 2.4%. The main Japanese index was up 1.4% based on more positive news.

Emerging Markets

The term “Emerging Markets” is a very broad church, and this month the focus is on such economies in South America.

Venezuela, for many years, has been plagued by corruption, government incompetence and crime – despite it having the biggest oil reserves in the world. We now witness the biggest mass migration in South American history as people flee the rapidly declining country after the economy has been brought to its knees by the incumbent government.

Living in a country where interest rates haven’t been measured in whole numbers for nearly a decade, it is almost unimaginable a country where they are in such a mess they must increase their rate to 60%. This is what has happened in Argentina as the government attempts to prop up the local currency.

Brazil is another country facing potential economic ruin, but I will save this for next month’s note….

Despite India being hit by devastating floods, the country is enjoying some impressive growth and is closing the gap with their Chinese neighbours. The country’s GDP is now expanding by 8.2%. The index was up 3.4% in recognition of this news.