HAVING spent last week in France with three small children, it became increasingly apparent how meticulous one must be about planning the day around the unpredictable summer weather: too much sun, the children get irritated; too much rain, the children get irritated.

The markets, too, have had their fair share of burning sunshine and sudden summer squalls over recent months, meaning that investors have been burnt to a crisp and rain drenched almost at the same time. As is quite often the case in the supposedly quiet summer months, where liquidity is reduced and market moves pronounced, markets have become unpredictable for very understandable reasons.

This year has been remarkable so far in that fundamental assessments of the global economic environment and corporate profits have become, for the most part, pointless. Equity markets have become far more akin to a roulette wheel where investors are betting on central bank policy and political matters rather than assessing how well things are going for that investment. That equity markets have soared higher and higher in the face of a global economy that is slumping to its weakest state since 2009 and corporate profitability growth has basically dried up, is a reflection that all investors really care about is the expectation of central bankers riding to their rescue and pumping cheap money into the financial system. It also shows that there is a broad belief that the growing frictions around the world over trade will blow over as quickly as a summer storm.

It would be totally naïve to pretend that the central banking playbook used since 2009 has been anything other than hugely powerful for asset markets, even if we must recognise that most actions have been pointless and destabilising from an economic perspective. We have seen that the modus operandi of most major central banks will be to loosen monetary policy further in the coming months, thereby both reducing the cost of debt and supposedly increasing the flow of debt in an attempt to boost economic growth.

They should know by now that the economic efficacy of such policies is limited, but it could well be that they stabilise markets in the short term and allow markets to make further gains.

Ultimately, central bankers should stand pat, try to encourage some normalisation in the financial system and stop feeding more cheap debt to the ‘hooked’ global economy.

That is clearly not going to happen. Their actions have now led to nearly a quarter of all outstanding global bonds having a negative yield - $15 trillion worth - leading to desperate capital allocation decisions as income-strapped investors are forced to take more risk.

Politically, in the UK it has become obvious both in the refreshed government’s message and the financial markets that the chance of a no-deal divorce between the UK and Europe has risen to a coin-toss situation.

There will be a lot of volatility in the next few months, but we believe we are getting to the point where the worst-case scenario is priced into UK markets and we are reviewing any positions in UK gilts and seeking to add more sterling exposure. Selected UK assets look like an interesting contrarian opportunity.

Much more important than the never-ending story that is Brexit is the growing spat between the US and China, which has morphed from a trade conflict into a major debate over national security.

Ultimately, a flimsy and pointless deal will be reached over trade, allowing both sides to claim victory, but that Pandora’s Box has been opened and a new Cold War has been let out between the world’s two biggest economies.

The fact that all these issues are culminating at the same time should undoubtedly be a worry for investors. They should tread with care and ensure their investment portfolio has an adequate mix of investments to make hay while the sun is shining and protect when the heavens open.

Thomas Becket is chief investment officer at Psigma.