Hoping to avoid a loss of face, the UK and the EU can be expected to continue to negotiate right up to the last minute. Both sides want to avoid a “hard Brexit“ – i.e. a Brexit without agreement on the future UK-EU relationship – and this mutual interest means such an outcome can be avoided. Sterling is clearly undervalued and attractive on a medium-term basis. By contrast, UK stocks have an attractiveness rating which is only average.

Sell-off on the stock markets. We recommend not panicking. On the other hand, we believe it is still too early for targeted increases in the equity quota. We are still maintaining our equity underweight in order to consider an increase if necessary

For 2018, we expect global economic growth of 3.5%. In 2019, we expect growth to cool slightly. The exporting nations are suffering from the protectionist measures of the US government.

On September 9, the Swedish Rigstag elections will be held. The European Commission has criticized the elections. This could not take place anonymously, because the electoral lists of the parties would be publicly displayed. Therefore one sees if the voter takes the ballot paper of the party to be voted for into the booth.

In October, election chaos in Europe could weaken the euro. After that, chaos in the USA could weaken the dollar. On October 14, the Bavarian state elections will take place. The CSU and the SPD are threatened with landslide losses, which could jeopardize the continuation of the Grand Coalition.

Turkey: should we be alarmed? The collapse of the Turkish lira has taken on dramatic proportions.

Investors feel themselves confronted with many geopolitical risks. The most disturbing would be an escalation of trade hostilities and protectionism. We still believe a serious trade war can be avoided. 2018 is likely to go down in the history books as the “peak liquidity“ year. It’s too early to re-enter the markets.

Executive Summary We expect the global economy to grow by 3.5% in 2018. In the USA in particular, the growth figures for the second quarter are likely to surprise on the upside. The economic upswing in the eurozone is losing some steam. Exporting nations are suffering from the US government's "trade skirmishes". In the short term, however, the risk of recession remains low. The procyclical US fiscal policy is ruining the US national budget in the medium term. We expect in [...]

Italy is staying in the Eurozone. But the new Italian government takes a cavalier view as to the spending programs it can afford. This spells trouble for bonds. Italian government bonds are unattractive, but Italian equities seem reasonably valued.

The attempt to install a functioning government in Italy has collapsed. The result of recent Italian elections reflects a chronically sluggish economy, excessive regulation and taxation as well as political exhaustion, especially within the established parties.

Unfortunately, a “mini trade war“ is the price the rest of the world must pay as Republicans campaign to hang on to the votes of globalization’s losers in the upcoming mid-term elections. But US protectionist pressures go beyond mere populist rhetoric. The US wants to inhibit China’s attempts to grab US intellectual property, especially when it comes to the defense industries.

We expect the global economy to grow by around 3.5% in 2018. The upswing will lose momentum slightly, especially in the euro zone.