Exposure rates of the Dorval Asset Management Range – 4th October 2019

The poor results from ISM surveys with US companies refocused investors’ attention on the trade war and its detrimental effects, with the lion’s share of the economic shock a result of the collapse in export orders, which have hit their lowest since 2009 (cf. chart 1). 

Exports’ small contribution to US GDP (12%), along with support from financial conditions as a result of the Fed’s accommodative policy considerably mitigate the risk of recession. However, the escalating tariff tit-for-tat seems to be having an increasing marginal cost for the economy, particularly as domestic demand is slowing somewhat. Investors will therefore closely monitor the tone displayed at US-China trade talks slated for October 10.


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