In today’s briefing:
- UK: Forgotten Excesses
- US/CHINA AI WAR: State of Play & AI Sovereignty Decisions
- Morning Market Notes: Oman Need Not Worry, in Our View
- Global Competitive Barrier Portfolio (18 Aug 2026)
- Global Income Portfolio (18 Aug 2026)
- Energy Weekly (W/E 14/Aug): Hormuz Drives Oil Volatility, Positioning Improves, Valero Extends Rally
- Sentiment Matters: Heatmap Update
- TAC Index Weekly Air Cargo Bulletin 17.AUGUST.2026
UK: Forgotten Excesses
- Q2’s flat end for the labour market might be exaggerated by imputation after the ONS forgot to appoint anyone to pick up the phone for the labour force survey.
- Underemployment’s decline corroborates the labour market’s trend of tightening so far in 2026, despite low vacancies, as both supply and demand are structurally struggling.
- Divergent pay growth measures have slowed by about 0.5pp on the year but remain excessive, near 4%. We still expect the BoE to hike once, failing to break the problem.
US/CHINA AI WAR: State of Play & AI Sovereignty Decisions
- President Trump is pressuring nations to sign a Loyalty Pledge to the US for their AI future. The pledge aims to counter the rapid growth of open-weight Chinese AI models.
- Nations that agree to the AI Pledge risk compromising their digital sovereignty. This concern was underscored recently when the United States restricted foreign nationals’ access to Anthropic’s latest AI models.
- If the US can convince countries to join its US-controlled AI ecosystem, it would pose a powerful mechanism to co-opt them into future conflicts driven by US geopolitical interests.
Morning Market Notes: Oman Need Not Worry, in Our View
- Oil prices gained yesterday in response to President Trump’s threat to bomb Oman, an ally of the United States, if they try to “control” the Strait of Hormuz with Iran.
- At the risk of famous last words, this will never happen, but if we are wrong, President Trump, with respect, will have opened a floodgate difficult to close.
- In any event, as before, we would be sellers of the prompt NYMEX crude oil contract if it reaches our trading range peak of roughly $88.00 per barrel.
Global Competitive Barrier Portfolio (18 Aug 2026)
- The strategy seeks to invest in global companies with sustainable competitive advantages.
- By adopting a portfolio of stocks instead of individual stocks, the strategy is diversified across countries and industries; and optimised with respect to their expected risks and returns.
- Previous portfolio returned 7.1% vs. MSCI World (4.2%) – outperformed the benchmark by 2.9%.
Global Income Portfolio (18 Aug 2026)
- Dividend is a key component of overall returns.
- The strategy seeks to invest in high dividend stocks globally.
- By adopting a portfolio of stocks instead of individual stocks, the strategy is diversified across countries and industries; and optimised with respect to their expected risks and returns.
Energy Weekly (W/E 14/Aug): Hormuz Drives Oil Volatility, Positioning Improves, Valero Extends Rally
- WTI swung daily as shifting U.S.-Iran signals repeatedly changed the risk premium, while a record inventory build briefly pressured prices before renewed sanctions fears.
- WTI options volatility fell while managed money added longs and cut shorts, pointing to improving bullish conviction despite continued demand for downside protection.
- Energy ETFs attracted broad inflows, while VLO offered the cleanest exposure to a distillate-led refining rally despite a sharp valuation re-rating.
Sentiment Matters: Heatmap Update
- Risk appetite: Sentiment is close to its most bullish level in five years, a modest headwind but not yet a strong standalone sell signal.
- India added: A new Indian equities Heatmap expands coverage into another large, liquid market with strong futures accessibility and useful positioning data.
- Brazil cools: Sentiment has fallen sharply from late-July extremes, but only back to neutral rather than the bearish levels seen before June’s rally.
TAC Index Weekly Air Cargo Bulletin 17.AUGUST.2026
- Global air freight rates edged a little higher again last week according to the latest data from TAC Index, the leading price reporting agency for air freight markets and calculating agent for the Baltic Air Freight indices.
- The global Baltic Air Freight Index (BAI00) gained +0.2% over the seven days to August 17, leaving it higher by +19.2% over 12 months previously – with tensions still simmering in the Persian Gulf and jet fuel price pressures escalating again after an average gain of +8.2% over the week to August 14 leaving jet fuel now at +76.5% year-on-year according to the latest IATA Jet Fuel Monitor figures.
- Rates on the busiest lanes out of China were up again WoW both to the US and to Europe amid signs that, after an initial sharp drop in volumes last month, the market has now started to adjust to the new flat-rate customs regime into the EU following an end to the old de minimis exemption for smaller parcels on July 1.
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