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It’s not an all clear message but Santa just may pay us a visit this year.

In the past 30 days, several risks have diminished:

  • Trade:  Odds of all-out trade war have significantly decreased after the meeting on Saturday between President Trump and Chinese President Xi Jinping.
  • Rate hikes:  Last week, Fed Chair, Jerome Powell. hinted we may be closer to an end for rate hikes based on recent economic data (hike coming this month).  This ignited a stock market rally.
  • The mid-term elections are behind us.  Investors have a better understanding of the rules going forward.

This year, it has been all about the T – Trade, Tariffs, Trump & Tweets.  The uncertainty with trade has put many asset classes in the doldrums.

  • Cash was leading the pack for year to date returns at one point last month.
  • A November Deutsche Bank study highlighted that nearly every asset class was down for 2018, something that has not occurred going back to the early 1900s.

With the announcement of the truce between Trump and China, maybe clearer skies are ahead.  A summary of this weekend’s trade developments:

  • 90 day Ceasefire:  Trump’s planned increases on Chinese tariffs from 10-20% on $200 bln scheduled to go into effect on 1/1/19 were put on hold.
    • China likewise agreed for now to no new tariffs on US imports.
  • Trump has tweeted this morning that China has agreed to cut auto tariffs on US cars by 40%.
  • Other comments hint at China agreeing to significantly increase (no actual $ figures given) purchases of US agricultural, energy, industrial and other goods.

News flow is driving markets this year.  Investor sentiment is swinging back and forth from extreme greed to extreme fear.  Sticking to an investment plan and not letting behavior get in the way will help guide us through these turbulent times.

Please reach out to us with any questions.