In The Lonely Bull

What is noise as opposed to what is real becomes obvious in hindsight. Both the bond markets and stock markets around the world are responding to fears of a global slowdown and perhaps recessions in certain markets.  The fear is being amplified by worries that there are scant tools to turn negative economic momentum around.  Low interest rates have done what they can do, and fiscal stimulus is unlikely in a world already awash in debt.

Add to basic economic concerns, those around potential flash points, that could impact world economic performance.  Brexit, Germany, China, Hong Kong, Iran, Italy, Kashmir, North Korea, South China Sea, Turkey, Venezuela, Argentina; just to name a few!  Most of these have very little to do with the value of U.S. corporate assets, but in a fearful environment, they loom larger.  The one truly important issue is the trade war.  It is not at all evident that the U.S. is really winning.  The trade deficit with China is growing, not declining.  It may be that an adjustment to strategy soon may be required.

Until some prospect of resolution to the important issues raised in trade with China and some other countries, markets are likely to remain off balance.  This does not necessarily mean bad, but every statistic, news item, and Presidential tweet have outsized reactions.  The underlying economic trend in the U.S. is still good; just a little more mixed than a year ago.  The Bull still believes that the probabilities and logic are for some resolution of trade issues.  It just may take more time, stay steady my, friends.

The Lonely Bull

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