Financial markets around the globe continue to reflect vulnerability. Vulnerability in political discourse, in trade discussions, in agreement on climate change, and, most recently, on the strength of the US economy. Large scale protests in Hong Kong speak of a populace that no longer trusts the system of representation. UK Prime Minister Johnson, similarly, prorogues parliament in order to circumvent the normal checks and balances leading up to the October Brexit deadline. And all of this while the Zondo commission in South Africa enters its 180th day. No wonder then that businesses have scaled back on new hires and new capital projects. In looking at the most recent dynamic of the "repo" market at the Fed, we are concerned, particularly in light of the ever-increasing funding shortfalls that sent overnight rates in the US as high as 10 percent. These global forces impacted equity markets in early September through a marked rotation away from "momentum" and "growth" to "value" as p:e multiples in the former contracted rather sharply.

We remain defensively positioned with a high cash weighting and a position in gold while monitoring positioning in each of the quality stocks held in your portfolio.

While investors seem to have regained some composure ahead of an expected US Fed Fund rate cut in July, as is common of these phases in the market, the tradeweighted dollar has declined in value. This has provided some breathing space for emerging market currencies. Gold has surged as the dollar has weakened with investors now seemingly interested in gold as a counter-trade to the dollar. In many ways, the current macro-environment feels a lot like 1998 in that the US yield curve is inverted (short rates are higher than long rates); the ISM (Institute of Supply Management) indicators suggest weaker manufacturing activity; and inflation around the world is falling leading to a more cautious stance by central banks. Why is any of this important? Well, in 1998 equity markets rallied sharply as the Fed began to cut interest rates and the dollar weakened. Why? US corporate earnings are influenced by both factors.

It is likely higher corporate profits and higher stock prices are on the horizon. However, we see a catch; the recent ramp-up in stock prices may give the Fed reason to pause next month.

Nvidia enjoyed a particularly strong rally in June after being punished by the market as a result of trade war fears earlier in the year. Barrick Gold delivered 22 percent for the month impacted by the rising gold price. Investors seem to welcome the move by Apple away from devices into services although it remains to be seen how Tim Cook will manage the departure of Sir Jony Ive who recently announced that he was setting up his own design company after 20 years with Apple. Thermo Fisher moved higher as news emerged of another acquisition (always a concern) and guided for higher profits going forward.