June 21 2019

Clash Moment

In this true punk-rock moment for clashing markets, question is more than ever one of Should-I-Stay-or-Should-I-Go-Now. Let’s recap on the past relationship so far. Yes, it has been tumultuous but mostly up over a long-term period driven by momentum.

Of course, there are multiplying signs of this late-cycle crisis with sagging PMIs and past-peak employment data. But we can power through honey, can’t we? A tax incentive here, a rate cut there and we could be off to the good days again, right?

After all, lower rate will certainly rekindle the flame of real estate, as well as abate signs of tension in the credit markets, even for the more distressed tranches. Consumer confidence could hold a little longer and CEOs’ confidence, almost at recession-time lows, could climb back up thus leading capex up too.

In truth, no one wants to part with such a great market winning streak, certainly not the Fed. While political uncertainty is high, reflecting trade wars and brewing geopolitical instability, the red-flashing economic signals are still very few.

However, when it comes to the relationship between economic data and markets “better or worse tends to matter more than good or bad” as the perspicacious Liz Ann Sonders puts it, and the risk of a market gap has become higher. Break-ups are always preceded by these crisis moments that don’t mean much to you in isolation but trigger vast chain reactions. Which ones could you think of now? An oil-shock linked to tension escalations in the Middle East, this widening wealth gap that we neglected, or our failure to address the causes of climate change globally.

As always, our ability to preserve happiness and stability resides in our true commitment to care. Do you?

360 Advisory – Markets