4.1 GDP reported for the 2nd quarter, 2018 is an impressive number for the US economy, giving a healthy boost to the US stock markets mainly the FANGs (Facebook, Amazon, Netflix & Google). The main driver of this growth can be significantly attributed to the Trump administration’s last year ‘s tax cuts which tend to be short term in nature followed by a hangover.

On the other hand, Central Banks, specifically Fed has embarked on raising interest rates. They have already raised interest rates twice this year and have convinced the markets that they will raise them twice more before the end of the year to control the growing inflationary pressures. In a normal business cycle their related effects are higher market interest rates and declining growth. Higher rates in US have caused appreciated USD, specifically against Emerging Market currencies who seem to be scrambling to manage their USD denominated debt payments. This will be more visible thru sharply declining growth in emerging markets, the main drivers of the global economic growth in the last decade.

In addition, the US-Tariff conflicts with EU and China seem to be a real concern causing negative reports from multinationals like GM, Ford and Harley Davidson etc. For the rest of 2018 nothing matters more the trade dispute between China and United States.

It would be advisable to protect yourself with USD denominated defensive stocks and bonds.