We find that in times of volatility it is helpful to make sense of the noise. Provided below are a couple of items we are reading/listening to right now and find relevant to share.
This is important to you because realistic expectations of market performance are key to managing risk over the long run. The seemingly conflicting nature of the two sources aside they confirm our belief in slower growth in the short run.
Considering the recent announcement of tariffs on the final $300 billion tranches of imports from China caught the markets by surprise, we are reminded of the uncertain nature of projecting the future.
It is quite possible China will now delay negotiations on tariffs until after the U.S. Presidential election in November 2020. We believe the markets are responding to this new possibility. The application of academic rigor, research, and logic to reduce risk, fees, and taxes is at the core of our investment process.
What we have found most relevant:
- Ray Dalio of Bridgewater Associates recent interview with Goldman Sachs strategist Allison Nathan covered a lot of ground. A key takeaway was his belief that we will see, “slow growth rather than a meaningful recession in the near term.”
- Vanguard’s Investment Strategy Research Group is a bit more bearish believing that, owing to “intractable structural issues,” the U.S. and China have “likely reached an impasse” on resolving trade difficulties. In addition, Vanguard sees the recent imposition of a 3% tax on large global tech companies by France as a precursor to U.S. retaliation ahead of U.S.– European Union trade negotiations. They recently increased to 40% the likelihood of a U.S. recession in the next 12-to-18 months and a slowdown of the number of monthly job creations in the U.S. to below 150,000 by the end of 2019.
If you have any questions, concerns, or changes please do not hesitate to schedule a strategic update.