Year-to-date, most markets around the world have adequately recovered from last year’s fourth quarter meltdown. But what about since January 2018, nearly 2 years ago? The Dow Jones Index is flat, the Russell 2000 is negative, and the majority of world markets are even lower than that.
Corporate confidence is not so good. It’s just the trade war. Business investment is slowing. It’ll come back. Manufacturing is weak. It’s too small to matter. Yields are low and the curve is inverted. It’s different this time. But these points are all happening at the same time. One chart may represent a chapter, but all of them together tell a full story. We can be quick to dismiss one point as noise, but we caution dismissing all of them simultaneously. The more stress on businesses = more stress on profits = more stress on markets. Are things going well? Are they not? Are they are about to go bad? What in the world is going on?
In our fall note (link below), we offer Doxa’s view on the big picture, positioning, and take on the most important question in investing: is it time to be more defensive or more aggressive?