August 18, 2019 – Last week was another incredibly volatile period for financial markets, with trade tensions, mixed economic data, and an inverted yield curve contributing to wild swings in stock and bond markets. While the recession risks have risen, it is still not our base case that the U.S. will enter recession or experience negative government interest rates prior to next year’s election.
August 1, 2019—Just when we think we have a fairly good read on the prospects for policy—namely monetary policy and trade policy—we get thrown another curve ball of the trade variety.
On Thursday, President Trump announced via Twitter that tariffs would be increased by 10% on the remaining roughly $300 billion of U.S. imports from China beginning September 1. This comes on the heels of the first in-person trade talks between the U.S.
June 18, 2019—There are two sides to every story. And then there is the truth, which often lies somewhere in the middle. This is true of stock and bond markets today, and while we are not in the business of “taking sides,” we think there is truth to both narratives.
Four months into 2019 and the S&P 500 is up 17% (price return), making it the seventh best start to the year for the index since 1929. One sector is just barely eking out a positive return: health care. The return spread between health care and the best-performing sector—technology—over just the first four months of the year is a staggering 24%.There are two main reasons why the health care sector appears to be on life support.
May 17, 2019 – This week’s nearly round trip in stock markets serves as yet another reminder that it is incredibly difficult and misguided to try to predict short-term movements in the financial markets. After a steep -2.5% drop in the S&P 500 on Monday, in response to an escalating trade war between the U.S. and China, the market clawed its way back and was set to close flat on the week as of Thursday afternoon.