This Week in the Market

With Scott McCaghren and Tony LaPorta

Equity markets have been uneventful at best with prices slowly grinding higher. We did experience a bit of volatility earlier in the week due to continued uncertainties surrounding the trade issues with China.  It appears that waiting until after the 2020 election to complete any talks might now be an option, if not, a reality. There is also another tariff deadline coming up which will be interesting to see what effects that might have. In addition, U.S. support for the Hong Kong protesters have further agitated progress. 

We have never been of the belief that there would be an actual outcome before the 2020 elections; however, the markets obviously did. One could even make the argument that markets continue to believe there will be some sort of positive outcome given the current levels. The reality is that a significant portion of the recent climb higher has been built on the assumption that there would be a positive outcome, begging the question, what if there isn’t.

*Side note- you will hear towards the end of the audio portion exactly what news driven markets are capable of due to the news release during the discussion.

Our view is to maintain our allocations over the next several weeks before performing another major re-balance to bring us into 2020. That re-balance will be focused on expected returns with a volatility-controlled overlay. This is not to suggest that we are going to maintain our current hedge, just that we want to maintain our current stance on volatility given the amount of uncertainties that could affect the overall atmosphere. This will more than likely look at a different mechanism to stave off some of the expected volatility in a different manner than we currently have positioned. As always, we continue to monitor all equity, treasury, commodity and currency conditions in order to efficiently deploy capital as well as protect invested assets. 

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