Keep connected
Our investment management team is made up of engaged thought leaders. Get their latest commentary and stay informed of their frequent media interviews, all delivered to your inbox.
What surprised us most about the stock market strength in 2017 was the way investors completely ignored the daily deluge of potentially disruptive moves out of the Trump administration that normally might have been expected to make investors more nervous. From fights with supposed partners such as the EU and Canada to geo-political risks on the Korean peninsula to allegations about the involvement with Russians and their online influence on election results to constant turnover in the West Wing to sexual bribery allegations to potential government shutdowns over budget fights and a debt which exceeded US$20 trillion, investors just went on their merry way, taking no notice of all this noise and focusing instead on the potential benefits from deregulation and the tax cuts that finally got passed late in the year. But this has all changed in 2018 as the news out of Washington is having an economic impact. What really weighed on the stock market was the escalation of the trade wars, notably with President Donald Trump calling for tariffs of $200 billion of imports from China, on top of the levies on $50 billion already announced. Trump also threatened 20% tariffs on European autos. This is a completely different story than the press scandals of 2017 because it undercuts one of the key tenets of the stock market strength, that being the strength of the U.S. economy and the consequent strength in corporate profits. The bottom line is that when the Washington headlines begin focusing on economic and profit issues, then investors begin paying attention! (more…)