I hope that everyone is starting to get into the holiday spirit. For investors, it seems that Santa Clause came early – the renewed optimism for a trade deal between the US and China (which started in mid-October), carried through for most of this past month lifting stock prices to all-time highs.
As has been the trend, there was an increased level of concern to end the month. It is being suggested that the Chinese government is not pleased after the US passed legislation which seems to benefit the protestors in Hong Kong. China may be getting more desperate to get a deal done however, after it was reported that their economy grew by just 6% in the third quarter of 2019 (the lowest annual growth rate in 27 years!). Not surprisingly, the main reason for China’s economic slowdown was a decrease in exports.
We expect that posturing between the two nations will continue throughout most of 2020, but will ultimately end in a deal getting done. A resolution to the trade war remains one of Trump’s best plays to boost the US economy, should conditions deteriorate heading into the Fall 2020 election.
The overall US economic outlook appears to be improving, with forecasts for a recession dropping down to 30% this month (after spiking up to 70% over the summer). Hope for a resolution to the trade dispute, combined with low inflation expectations, low unemployment and strong consumer confidence has economists questioning whether the previous worries of a slowdown were overblown?
We remain neutral on the overall state of global affairs heading into the last month of the year – doing our best to successfully position our investment portfolios for an unexpected market downturn, but also happily enjoying this upswing in our current equity holdings.
Hope you all have a wonderful Holiday Season this December!
-The Creed Team