Creating a common currency designed to curtail \u2014 and displace \u2013 the dominance of the U.S. dollar as the world\u2019s reserve currency has been a central theme when the BRICS Summit was formalized in 2009 with initial founding membership of Brazil, Russia, India, and China. Today, the dollar remains the commanding currency in global transactions, involved in an overwhelming number of exchanges, although a growing number of dealings involve the euro.<\/p>\n
Putin has recently called for BRICS to establish a \u201csafer and harmonious world\u201d with a goal towards creating its own parliament.<\/p>\n
Today, BRICS as an intergovernmental organization is comprised of Russia, China, India, Brazil, South Africa, Egypt, Ethiopia, Iran and United Arab Emirates. Saudi Arabia, due to join formally in January 2024, has not yet declared its official membership, while rumors persist that North Korea is seeking affiliation. Argentina was also invited to join, although newly elected President Javier Milei has made it clear the nation will not be joining in the near-term.<\/p>\n
Turkey, a NATO member, has requested BRICS membership as \u2013 according to reports \u2013 it pursues a path that includes its partnership with the West, but broadens its influence beyond the West.<\/p>\n
BRICS Summit 2024 will be in Kazan (Russia) from October 22\u201324 amid a global backdrop of increased geopolitical conflict and tension.<\/p>\n
Dislodging the Dollar From the Spotlight<\/strong><\/p>\n With the dollar still considered the world\u2019s reserve currency, it continues to reflect the broader hegemony BRICS fervently seeks to dismantle. The dollar\u2019s primary rival is China\u2019s yuan \u2013 or renminbi \u2013 as Beijing, despite making progress in having trading partners execute purchases in the yuan, is seemingly determined to overturn the dollar as the leading global reserve currency.<\/p>\n In 2016, giving sway to Beijing\u2019s lobbying efforts at the International Monetary Fund (IMF), the renminbi was included in the IMF\u2019s Special Drawing Rights (SDR) basket despite the fact that China was technically an emerging market. The basket included the dollar, the euro, the yen and the British pound. For Beijing, this was deemed a major step towards recognizing its growing economic prominence and offered confirmation and legitimacy to the global importance of its currency.<\/p>\n Beijing continues to transition away from the dollar as Russia and China claim Washington has weaponized the dollar by seizing dollar-denominated assets.<\/p>\n Moreover, as the dollar represents U.S. strength, transparency, and deep liquidity globally, reducing its influence is a primary objective for many in the BRICS community, although it still hasn\u2019t dented the underlying strength of the greenback. Recently, the dollar has eased against a basket of its trading peers as the Federal Reserve has made it clear it will initiate a rate easing cycle at its September 18 meeting as inflation edges lower.<\/p>\n This is a function of the so-called \u201cinterest rate differential,\u201d a financial\/currency term that serves to soften a currency against other currencies when its central bank moves from higher to lower interest rates, as it similarly strengthens a currency when the respective central bank keeps rates higher.<\/p>\n The push against the dollar is expected to be, again, a major and popular theme at the upcoming BRICS Summit.<\/p>\n The Economic Importance of BRICS Continues To Grow Source: LPL Research, International Monetary Fund 08\/27\/24<\/p>\n BRICS\u2019 Leading Members Forge Closer Military and Mutual Support Ties<\/strong><\/p>\n Although the stated aim for the BRICS is centered chiefly on economic and financial policies, during 2023 2024 with the escalation of the Russia-Ukraine conflict, China\u2019s threats against Taiwan and force in the South China Sea, Russia\u2019s more deeply rooted bilateral relationship with North Korea, Iranian surrogates engaged in armed combat with Israel, and sales of Russian-sanctioned oil and liquified natural gas (LNG) to BRICS members, there\u2019s a developing potential for a wider platform that recognizes deeper mutual support within the broader realm of military cooperation among the BRICS constituency.<\/p>\n The military threat underpinning Russia\u2019s relationship with China has been fortified with China\u2019s steady shipments of military components destined for Russia\u2019s arsenal. In late August, U.S. authorities leveled sanctions against Chinese companies that have been supplying parts for drones that Russia is using in its attacks on Ukraine. This is in addition to sanctions placed on a host of other Chinese companies supporting Russia\u2019s war effort.<\/p>\n Also, the United Arab Emirates (UAE), another BRICS member, has had sanctions imposed on a UAE-based shipping company that is involved in shipping Russian LNG.<\/p>\n The Western alliance is facing a stronger bond among some of the members of the BRICS coalition, and although diffuse and non-binding, the associated rhetoric from the meeting could incorporate decidedly more combative themes and slogans.<\/p>\n The makeup of the BRICS includes relationships, such as India and China, which have experienced border tensions that have involved military skirmishes, but the general tone of the BRICS going into the summit remains contentious vis-\u00e0-vis the West on a number of levels regardless of the harmoniously-oriented sloganeering.<\/p>\n New BRICS+ Members Finalize Membership in the Bloc<\/strong><\/p>\n Pie chart represents the percent of gross domestic product each BRIC+ country composes. The U.S. Election Implications<\/strong><\/p>\n Although domestic issues in general \u2014 and economic conditions in particular \u2014 remain central to the electorate, both candidates are nonetheless expected to deliver their respective foreign policy agendas that reflect concerns and objectives for containing an escalation in world tensions.<\/p>\n U.S. markets have successfully navigated the headlines amid geopolitical uncertainty, thanks in large part to a backdrop of strong earnings momentum and unrivaled technology prowess, characterized as \u201cAmerican Exceptionalism.\u201d<\/p>\n Global investors continue to buy U.S. Treasury bonds, equities, and real estate, helping to underpin the economy. According to the most current surveys, they are looking towards U.S. leadership, regardless of which party occupies the White House, to continue playing a key role in mitigating global hostility.<\/p>\n Asset Allocation Insights<\/strong><\/p>\n LPL\u2019s Strategic and Tactical Asset Allocation Committee (STAAC) maintains its neutral stance on equities, while actively monitoring economic data, corporate profits, and technical analysis signals. The Committee expects volatility to remain elevated in the coming months as the market waits for more clarity on the economy, elections, and a better seasonal setup. The STAAC maintains its modest overweight to fixed income, funded from cash, which can help buffer against equity market volatility should economic conditions worsen, while also providing attractive income.<\/p>\n <\/p>\n Important Disclosures<\/strong><\/p>\n This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.<\/p>\n References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.<\/p>\n Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn\u2019t provide research on individual equities.<\/p>\n All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.<\/p>\n All investing involves risk, including possible loss of principal.<\/p>\n US Treasuries may be considered \u201csafe haven\u201d investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.<\/p>\n The Standard & Poor\u2019s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.<\/p>\n The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio.<\/p>\n Earnings per share (EPS) is the portion of a company\u2019s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company\u2019s profitability. Earnings per share is generally considered to be the single most important variable in determining a share\u2019s price. It is also a major component used to calculate the price-to-earnings valuation ratio.<\/p>\n All index data from Bloomberg.<\/p>\n <\/p>\n This research material has been prepared by LPL Financial LLC.<\/p>\n Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA\/SIPC).<\/strong> Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not<\/strong><\/span> an LPL affiliate, please note LPL makes no representation with respect to such entity.<\/p>\n Not Insured by FDIC\/NCUA or Any Other Government Agency | Not Bank\/Credit Union Guaranteed | Not Bank\/Credit Union Deposits or Obligations | May Lose Value<\/strong><\/p>\n For public use. In December 2023, Vladimir Putin declared that the 2024 BRICS Summit, hosted by Russia, would be focused on establishing a \u201cfair world order\u201d based on shared principles.<\/p>\n","protected":false},"author":3,"featured_media":13230,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","wds_primary_category":0,"footnotes":""},"categories":[12,16],"tags":[],"class_list":["post-13229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-research","category-weekly-market-commentary"],"_links":{"self":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts\/13229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/comments?post=13229"}],"version-history":[{"count":0,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/posts\/13229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/media\/13230"}],"wp:attachment":[{"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/media?parent=13229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/categories?post=13229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/wp-json\/wp\/v2\/tags?post=13229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n<\/strong><\/p>\n![\"\"](\"https:\/\/advisors1.bradcable.com\/mfg-nw\/wp-content\/uploads\/sites\/27\/2024\/09\/The-Economic-Importance-of-BRICS-Continues-To-Grow.png\")
<\/p>\n![\"\"](\"https:\/\/advisors1.bradcable.com\/mfg-nw\/wp-content\/uploads\/sites\/27\/2024\/09\/New-BRICS-Members-Finalize-Membership-in-the-Bloc.png\")
<\/p>\n
\nSource: LPL Research, World Bank, Organisation for Economic Co-operation and Development (OECD), British Broadcasting Company (BBC) 08\/27\/24<\/p>\n
\nMember FINRA\/SIPC.
\nRES-0001819-0824W Tracking #622587 (Exp. 09\/25)<\/p>\n","protected":false},"excerpt":{"rendered":"