Our view over the past four weeks was that the Trump Administration needed a win on trade (outside of China) to build support for larger escalation with China. This process is now in place. After weeks of rising trade tensions, the U.S. and EU meeting last week resulted in some rare positive trade-related news. It is unclear whether this marks a broader shift away from protectionism or is an isolated event. But at this point, the bar for positive surprises is so low that even news that negotiati… View More
We continue to believe that there is a disconnect between the strong US economy / robust corporate earnings and the wall-of-worry (trade, yield curve, debt levels, mid-term elections, etc.). Politics are trumping economics this midterm election year, but our base case remains intact: investors are underestimating the stimulative effects of fiscal stimulus and regulatory easing while overestimating the potential negative impacts of a trade war, a rotation (not a fade) in global growth is underwa… View More
The major indices, with the exception of the Russell 2000® Index, which has dominated markets for most of this year, closed higher last week even after a mid-week pullback following the announcement by the U.S. of an additional $200 billion worth of tariffs on Chinese goods in late August. As of Friday, the Chinese government had not yet responded. The equity markets rebounded strongly on Friday; for the week the Dow Jones Industrial Average led the indices with a 2.30% gain; the Nasdaq ros… View More
$800 billion The approximate value of stock that S&P 500 companies are on track to repurchase this year, which would eclipse 2007’s record buyback bonanza of $589.1 billion. Among the biggest buyers: Oracle, Bank of America and JPMorgan Chase. The historic spending spree isn't giving share prices the boost companies bargained for, and has some analysts worried that they're buying at excessive valuations during the peak of the economic cycle. Separately, business borrowing is picking up… View More
The US has officially imposed tariffs on $34 billion of imports from China, and China in response has imposed tariffs on $34 billion of US goods exported to China. We want to share some of the relevant facts to put the tariffs in perspective. In 2017, total US imports were $2.9 trillion and total US exports were $2.35 trillion. The $34 billion of tariffs equates to 1.2% of total US imports, and 1.4% of total US exports. We think this is important because both the US and China are imposing… View More