The past two weeks have not been kind to worldwide equity investors. After the most recent peak for broad domestic equity indexes at the beginning of May, prices have trended generally lower dragging International indexes lower as well. Trade tensions, including newly announced Mexico specific tariff threats, and worries about the health of the US economy have combined to unsettle equity markets. The chart below details the DJTMI over the past 12 months.
In view of the developments this week regarding US-China trade, I asked our chief investment strategist, Byron Sanders, what his thoughts were and if we should be making any tactical portfolio adjustments at this time. I think his comments are particularly instructive and worthy of sharing. Here is what he had to say:
First Quarter Market Comment
April 8, 2019
After a disappointing final quarter of 2018, global equity prices extended their post-Christmas
rally and posted very strong gains in the first quarter of 2019. Broad domestic benchmark indexes were standouts, but International and Emerging Market equities also delivered solidly positive numbers. US investors, especially, were cheered by the Federal Reserve’s decision, announced in late January, to suspend the program of scheduled ¼% increases in their Fed Funds rate that had through 2018.
The Fed Blinks
January 31, 2019
World equity prices have extended their January uptrend over the past two weeks. Most broad-based indexes have recovered more than 50% of the declines that ended on December 24, 2018. Progress on resolution of trade disputes with China and reduced anxiety over the course of short-term interest rates appear to have flipped investor sentiment 180° from late December.
January 10, 2019
A new year lies before investors. Most were happy to see the end of 2018 with its staggering volatility and almost commonplace 1-2% intraday swings. In this essay, we attempt to identify economic and political trends across the globe that can be expected to be among the key components of decisions to buy or sell equities in 2019.
Equity prices reflect the collective opinions, hopes, fears and experiences of market participants. News is disseminated virtually instantaneously and reflected in prices without delay. While we cannot foresee how, or which future developments will most affect the equity markets this year, it is useful to be aware of trends that could be germane to investor decisions.
Our Chief Investment Officer and Partner, Doug Kinsey, was quoted in the Dayton Daily News yesterday. We offer it below for your review. Best wishes to all for a Happy New Year and prosperous 2019!