The Perfect Storm
Investor Insights, April 13th, 2018
Five Things You Should Know
- Equity Markets – rebounded nicely this week with the S&P 500 up 2.09%, and the EAFE up 2.00%.
- Fixed Income Markets – were mixed with high-quality bonds (AGG) down slightly at -0.10%, but high-yield bonds (JNK) posting a strong return of +1.18% for the week.
- Trade “Turnaround” – the “trade war” talk lessened this week on the heels of a few different key comments. President Xi stated that China would seek to lower tariffs and open up their economy, which was followed by Trump’s quote “"President Xi and I will always be friends... China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property." Then came a Bloomberg report which noted, that Trump has asked “his aides to explore rejoining an Asia-Pacific trade pact he withdrew from shortly after taking office and said the U.S. and China ultimately may end up levying no new tariffs on each other – just a week after threatening them on some $150 billion of Chinese imports. “I think they’re going to treat us really fairly,” Trump said during a White House meeting.
- Fed Minutes - The Federal Open Market Committee released their minutes from last month's meeting where members voted to increase its policy rate by 25 basis points and outlined their path for further rate hikes. While the group did not note inflation tied to higher steel costs as a specific risk, they did note that retaliatory tariff responses could pose a downside risk. Members expect there to be two more hikes this year, followed by two to three in 2019.
- Key Insight – Our hope is that something positive can come from the recent volatility for investors; namely that they wake up to the risks that exist to their long-term wealth from the misguided allocations, value propositions and investment philosophies that are far too prevalent in the industry today. We take a look in the video above at the frequent flaws we come across, the associated dangers and how to alleviate them.
To read the full article/watch the video, click below!