I was asked my opinions by Nicole Petallides (she did 10 years at Fox Business Morning) for TDA Network. It’s a huge audience of around 750k traders. Since that is the audience, I get into the weeds on the German bond auction (who wants -0.5% for 30 years?), the huge yield of international value stocks (over 4% dividend yield, why not?), and the retest of the December lows for US small cap value (you buy retests of past lows, right?).
Here was my big issue beyond the trade talk: From Germany to France to the US - it’s all the same. Manufacturing is way off yet services is doing fine. What gives? Simple. The trade war really hurts firms that have to invest capital over the next 3-5 years. We simply have too much uncertainty for firms that are thinking of making big investments. On the other side, consumers are just fine. This fits my thesis that over the next six months you buy the weakness. Then, as people realize the recession didn’t happen overnight, markets shrug off the bad news to new highs - that is when you start taking profits and prepare for the actual recession that usually hits 12-18 months after a yield curve inversion.
The bottom line for non-traders: you stay optimistic in the face of uncertainty until 2020, then you reassess and tread cautiously.