The markets for 2019 started off with growth and less volatility than was seen throughout 2018. The volatility increased again last Friday, when the US announced an increase of tariffs from 10% to 25% on $200 billion of Chinese goods 1. This led to concerns of a possible slowing global growth, causing panic similar to what was experienced last year, with the trade war and interest rate hike news. China is expected to react to this announcement by the US, causing more uncertainty. China is having greater economic issues from the trade-war, so this is gives us more opportunities to consider buying into the market because the US economy is growing.
The summer is usually a slower time. Entering a trade war and having a more volatile market, it may be better to happen during this time of year. This gives the market time to potentially recover during the remainder of the year. I recently attended a market update meeting held by JP Morgan. Based on their thoughts and research, they think this year we will have continued growth at a slower rate, but not without volatility, as we are seeing. The overall economy is doing well, consumer spending remains high and the job market is still growing.
The trade war has been happening for over the past year. This is one of the volatile market reactions, as news is released and as we have seen the market react to tariffs over the past year. The US and China will likely continue to cause some volatility as the trade war continues, but this is something we have been dealing with for the past year. Steve and I will continue watching your portfolios and the market, if you have questions or concerns, please reach out to me.
Disclosures: JP Morgan, T-Squared Financial and LPL financial are not affiliated. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Reference:
- Matthews, C., & Kollmeyer, B. (2019, May 13). Dow tumbles more than 500 points as U.S.-China tariff battle escalates. Retrieved from https://www.marketwatch.com/story/dow-futures-drop-over-200-points-as-u-s-china-trade-talks-appear-stalled-2019-05-13