Investors were disappointedInvestors were disappointed that trade tensions re-escalated and the Fed viewed their actions as a “mid-cycle adjustment".
EM should continue to provide a substantial economic growth alpha relative to developed markets due to better demographics and a productivity catch-up.
Trade barriers, once constructed, are not easy to remove and their implementation is likely provide a slower backdrop for financial market performance.
Markets have bounced back nicely in 2019 after a volatile December due to concerns of rising rates, peak economic and earnings growth and geopolitical tensions.
On July 31st, The Federal Reserve (Fed) cut rates for the first time since 2008. In the immediate aftermath of this cut, the U.S. Dollar strengthened.
A slowdown is coming sooner rather than later. Investor should remain cautiously optimistic to environment growth, with a bias on quality and eye on duration.
Over the last decade, investors have been incentivized to “hunt for yield” in riskier asset classes by unorthodox monetary policy, which sucked the yield out of traditional “safe havens”.