We continue to believe the whole bull story for the equity markets is the weaker economic data. The S&P 500 (SPX) suffered a 5% correction from peak based on the increased trade tension with China. Ultimately, if it wasn’t the trade tensions, there would have been some other excuse like soft data, political theatrics or something else. The market was set up for a pause in the upside and we got it. The question becomes whether the correction should be limited to the expected 3-5% rather than a more dramatic 15-20% pullback like 2011, 2015-16, and 2018. We believe the chief determinant is the interest rate backdrop and Fed policy expectations.

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