Week in review: With friends like these …

This week, London provided the venue for NATO’s 70th birthday bash. But with insults flying between the leaders of member states, the occasion was hardly joyous.

The ramp-up in rhetoric began with France’s Emmanuel Macron, who described NATO as “brain dead” before the 70th anniversary summit began. President Trump was quick to take umbrage, describing the French president’s comments as “nasty” and “insulting”. For good measure, he took aim at NATO members who don’t meet the organisation’s defence-spending obligations, labelling them “delinquents”. And then Macron, Canadian prime minister Justin Trudeau and UK prime minister Boris Johnson were filmed apparently mocking the US president during the summit. Trump retaliated by calling Trudeau “two-faced”.

But despite all the rancour, the meeting produced some degree of unity. The members of the alliance reaffirmed their commitment to Article 5 of the Washington Treaty, which treats an attack on one member as an attack on them all. And the allies agreed to stand together against threats from Russia and China.

Itchy Twitter-finger

President Trump wasn’t content with hurling insults, however. His tweeting fingers were far from idle over the week, causing considerable consternation. The US president accused Argentina and Brazil of currency manipulation and moved to restore tariffs on steel and aluminium imports from both countries.

Trump also annoyed the French at a post-summit press conference, threatening to retaliate against a French digital-services tax with tariffs on wine, cheese, handbags and makeup. Nor did China escape his rhetorical crosshairs; he suggested that a proposed trade deal could be delayed until after the US election in 2020. The president did, however, strike a more positive note on Thursday, when he said that trade talks were “moving along”.

Global gloom

In the financial markets, this busy bout of tweeting led to a rally in government bonds and a sell-off in equities and the US dollar. The S&P 500 was down 0.8% by Thursday’s close. Analysts added to the malaise by continuing to pare back their earnings expectations for the fourth quarter.

Meanwhile, North American economic data pointed to stagnation. In the US, the Institute for Supply Management’s manufacturing index came in below expectations for November at just 48.1; this was the fourth consecutive month at which the reading was below the 50, indicating contraction. New orders were worse still, at 47.2. The Mexican purchasing managers’ index (PMI) slipped from a barely expansionary 50.4 to a firmly contractionary 48.

Elsewhere, evidence of the health of the global economy was mixed. Eurozone, UK and Japanese manufacturing PMIs were revised up for the final count, though France was still the only one above 50, at 51.7. China’s private-sector Caixin PMI surprised positively with a rise to 51.8 in November, even as growth in capital expenditure hit a three-year low.

Purse strings open

The growing gloom was met with some fresh fiscal stimulus. Shinzo Abe, Japan’s prime minister, announced a ¥13.2 trillion (US$121 billion) supplementary budget. The Hong Kong authorities chipped in with HK$4 billion (US$512 million) of relief spending.

On the monetary side, the Reserve Bank of Australia kept rates unchanged at 0.75%, despite slightly weaker-than-expected growth in the fourth quarter. The Canadian central bank also left rates unchanged, citing “nascent evidence that the global economy is stabilising”.

Taking a pounding

In the UK, sterling hit its highest level against the euro since May 2017 as opinion polls suggested a firm Conservative lead ahead of next week’s general election. Conversely, the FTSE 100 was down 2.8% by Thursday’s close; many of the largest UK-listed companies make the bulk of their earnings abroad, and so their shares tend to be adversely affected by a stronger pound.

European shares fell heavily at the start of the week, but mounted a recovery thereafter. Overall, the FTSE World Europe ex UK Index was down 1.1% by Thursday’s close.

Spending spree

With negative interest rates providing an incentive for corporate acquisitions, Japanese and European companies have been on a cash-fuelled spending spree. This week, Japan’s Astellas announced that it is to buy US gene therapist Audentes for £3 billion in cash.

Meanwhile, China’s Zijin Mining agreed to buy Canada’s Continental Gold for $1 billion. Another Canadian gold company, Endeavour Mining, made a public £1.47 billion buyout offer for its UK-listed peer Centamin. This offer was rejected, however.

And finally …

Distressing news for proponents of precision in punctuation: the Apostrophe Protection Society is no more.

The society was formed in 2001 to uphold correct usage of the punctuation mark – in possessives and contractions, since you ask – not in plurals (well, except plurals of numbers and letters in some style guides…).

But now, after 18 years of waging war on the greengrocers’ apostrophe (apple’s, pear’s, etc.), its founder, John Richards, is stepping down. “At 96, I am cutting back on my commitments,” he said. He lamented the state of modern orthography, declaring that “the ignorance and laziness present in modern times have won!”.

Here at Week in Review, we salute Mr Richards’ efforts (and have given this week’s text one final nervous proof!).

RISK WARNING

The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.

The views and conclusions expressed in this communication are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific security.

Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the "Owner") and is licensed for use by Standard Life Aberdeen**. Third Party Data may not be copied or distributed. Third Party Data is provided "as is" and is not warranted to be accurate, complete or timely.

To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

**Standard Life Aberdeen means the relevant member of Standard Life Aberdeen group, being Standard Life Aberdeen plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time.