Macro movers today:

  • Trade war news.  There again appears to be news the U.S. and China are close to a trade deal.  Yea, incredible but true – even though we hear it daily it is actually lifting futures just a bit.  The new news here is that China has agreed to increase penalties for IP theft suggesting we actually may be closer to signing the “Phase 1” deal ahead of the Dec 15th deadline for increased tariffs.
  • Global inflection point.  As you know, one of the key tenants for our positive view heading into 2020 is that global growth is seeing an inflection off of very weak levels of manufacturing activity.  Ground zero for weak growth has been in Germany where business confidence has been in decline for the better part of two years.  The data continue to reinforce our view with today’s release of the German IFO Business Survey coming in at a four month high.  The IFO surveys firms in manufacturing, construction, wholesaling and retailing to assess their current business situation.  To be clear, growth is poor, but the rate-of-change improvement without an actual trade deal suggests the turn higher could be more sustainable.
  • Fed Speak.  Jay Powell is speaking tonight in Providence, RI at the Greater Providence Chamber of Commerce 2019 Annual Meeting to discuss “Building on the Gains from the Long Expansion.”  We expect him to reinforce our view the Fed has undergone a generational change in the way they view inflation risk.  It has moved from fear of high inflation to fear of low inflation, which should allow for no rate hikes in the foreseeable future.  We call this the ultimate “Fed put.”


It is commonly quoted the definition of insanity is doing the same thing over and over again but expecting a different result.  We continue to caution against chasing around each trade related news item and fall back on what is working:

  1. Our key tactical indicators point to what we saw last week – a period of digestion of recent gains.  It has shown up more in the average stock so far rather than the indices…so far.
  2. Our positive core thesis continues to suggest adding exposure into weakness as the market works off its overbought condition.

Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.

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