In August, U.S. stocks posted their second monthly decline of 2019 with major averages down approximately 2%. The volatility in August was primarily driven by the trade war with China spiraling into a tit-for-tat exchange. Following President Trump’s August 1st announcement of additional tariffs on Chinese goods, the Chinese countered with a fresh round of tariffs on $75 billion of U.S. products. This was then followed by the President ordering U.S. companies to stop manufacturing in China. As we have said from the beginning this is a lose-lose situation for both countries. By reducing trade, which is beneficial from an economic standpoint, the economies of both the U.S. and China suffer. More specifically, tariffs lead to consumers paying more for goods. In the U.S., consumer spending drives approximately 70% of GDP growth and currently U.S. consumer spending remains remarkably strong. With a tight labor market and rising stock prices, consumers are increasingly willing to spend. Eventually the impact of tariffs may start to eat away at consumer confidence as we saw a drop in consumer sentiment readings during August. At the end of the day, both the U.S. and China will likely not make any major concessions when a deal is struck and both sides will claim victory.