Throughout the second quarter there were hopes that the U.S. administration would finally understand that imposing tariffs, first on steel and aluminum and then on a long list of Chinese products, could only be bad for both the U.S. economy and the global economy. This hope quickly faded. The trade war between the U.S. and China began on July 6, when President Trump confirmed that he was imposing tariffs on $34 billion of Chinese products. An eye for an eye, a tooth for a tooth: as promised, China’s leaders quickly responded by imposing tariffs on the same amount of goods. However, the Americans then raised the stakes, announcing new tariffs on products worth another $200 billion, only to be quickly matched by the Chinese. With the improvisation and chaos that seem to govern decision-making at the White House, it is impossible to have any sense of where this trade war will end. What we do know is that an economic shock is inevitable.
Even though the period was marked by an unusual combination of upward trends, on both the equity and bond markets, and by a remarkable about-face by the U.S. Federal Reserve (the Fed), the Amethyst Fund performed well at the start of the year. The Fund’s three segments were able to seize opportunities and deliver attractive […]