15 Mar A MIXED DAY
Equity markets were mixed following a report that a meeting between China and the US to end the trade war is now likely to happen in April at the earliest. Many, including me, believe a trade deal is fully priced into the markets.
In my view the markets have also priced in a “patient” Fed.
What are the next possible catalysts? I continue to believe economic growth will continue to surprise on the upside. If trade uncertainty was the primary reason for the perceived weakness and if this concern is removed, will the narrative now change to one of growth which could in turn question monetary policy assumptions?
Many believe and are acting as though the markets are mono variable. Most are convinced that knowledge and experience do not matter; believing all one has to do is buy a no cost passive capitalization driven index. Macroeconomic and geopolitical knowledge and thesis is viewed as obsolete and unneeded.
Many iconic luminaries, including Buffet, Soros, Gundlach, and Einhorn have lamented as much stating current market philosophy is equivalent to music chairs.
This passive mentality will too change, perhaps the rationale as to why the late John Bogle of Vanguard believed the next 10 year annual return of a 50 50 account will be around 1.8%.
What will happen today?
Last night the foreign markets were up. London was up 0.71%, Paris up 0.94% and Frankfurt up 0.90%. China was up 1.04%, Japan up 0.77% and Hang Sang up 0.56%
The Dow should open moderately higher as worries appeared to ebb about the slowdown in global growth. The 10-year is unchanged at 2.63%.