As August rolled to its conclusion, so too did the second third of 2023. And with the dwindling rays of sun also comes about the return of the Wall Street “investor” to his Bloomberg terminal. By historical accounts, we now arguably head into the capricious investment season.
As such, it’s incumbent for a brief overview two August events – one that garners economic experts’ spotlight annually, the other a bloc meeting of potentially growing significance.
The first is the annual Jackson Hole Economic Symposium, a meeting sponsored by Federal Reserve minds since 1978, as they meld mental gymnastics on global economic issues. According to Investopedia1., “[p]articipants include prominent central bankers and finance ministers, as well as academic luminaries and leading financial market players from around the world.” Yes, I know, sounds riveting.
But, as with most any other day, all eyes are usually on the Chair of the US Federal Reserve, analyzing every word, tone, gesture and eye flicker that might give away what the Fed really thinks and how they will soon act. Everyone seems to think he’s bluffing when he speaks, and so continues the poker game of deciphering the true meaning of his utterances.
Whatever one’s beliefs on such symposiums, their potential affects on global investment markets cannot be understated. One “wrong” public move or statement by the attendees, especially the high-status ones, can send the markets into fits.
The second focal point is the BRICS Summit held in Johannesburg, South Africa. For clarity, BRICS = Brazil, Russia, India, China and South Africa. From an investment perspective, these represent the leaders of the Emerging Markets, albeit there are other countries that fall in the category too. I’d contend this to be a misnomer however, as China is far from an “emerging” market, given its ranking as the second largest economy in the world, behind only the USA.
The BRICS have been garnering more attention of late, especially as the economic repercussions of Russia’s invasion of Ukraine have played out over the last year and a half. Make no mistake however, this “collaboration” has its roots in a 1990’s strategic alliance between Russia, India and China.
This year’s summit attracted more attention for a couple of reasons. Firstly, the pending expansion of the alliance, with more countries added to its ranks. This summit confirmed that six countries were invited and will officially join the group as of January 2024 – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates (UAE).
Secondly, some thinkers suggested that the alliance was on the verge of announcing a new “BRICS currency”, one perhaps backed by gold or engineered through cryptocurrency, in an attempt to usurp US Dollar dominance in the world. There certainly has been much public chatter about this scheme and yet, an official announcement never materialized.
This year, both events could be classified as “nothingburgers”. The Jackson Hole Symposium produced nothing noteworthy while the topmost surprise from the BRICS summit was the lack of progress on their reserve currency substitute.
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All My Best,
Adrian Harasymiw Investment Advisor Pinnacle Sovereign Investments of ACPI
P.S. To review the August market numbers or download a PDF copy of this commentary, check out the Monthly Market Pulse page on our website.