A Very Brief Update after the storm has seemingly subsided!
It’s been a “nowhere to hide” situation for investors over the last several weeks.
If we look at the performance of 70 different types of asset classes from gold to bonds to oil to stocks, about 90% of them are down for the year through mid-November (negative total return in dollar terms).
The last time that many asset classes were down at the same time, none of us were alive – we’d have to go back to 1920, when 84% of 37 asset classes were negative.
Normally, we expect uncorrelated asset classes to fluctuate which is why diversification is generally a useful tool in smoothing out returns over time.
However in recent weeks there seems to be only one possible direction for asset classes to go: down.
I believe the declines were a “pause and refresh” for markets.
Stocks closed solidly higher on Friday and for the week, ending on a strong note one of the best weeks for stocks in 7 years.
Late on Saturday it was announced that a trade deal had indeed been struck between the two countries.
There would be no new tariffs placed on either country for the next 90 days (that includes freezing the planned tariff increase from 10% to 25% on $200 billion of Chinese goods).
In return, China has agreed to purchase a substantial amount of U.S. products, including agricultural goods.
Stock markets around the world are in rally mode, posting big gains following a truce in the trade spat between the U.S. and China.
President Trump agreed to postpone an increase in the tariff rate on $200B worth of Chinese imports to 25% (from 10%) that was scheduled for Jan. 1, while China will resume purchases of some U.S. farm, energy and industrial commodities.
The trade war hiatus relies on progress in talks that both sides aim to complete in the next 90 days covering broader issues, including forced technology transfer, intellectual property and cyber theft.
Meanwhile Brext ‘uncertainty’ (to put it politely!) continues to weigh heavily on the Pound and to an extent on GBP portfolios.
Fund valuations may take several days to reflect the increased valuations on your Core app- (for expat clients in China, Taiwan, South Korea, Macau and Mongolia).