Market updates are typically not planned during the month. But the aggressive stock market volatility is presenting a unique situation not seen in recent times.
The past week raised the possibility of a growing trade war with China. If left unchecked, such trade-related friction has the potential to create economic uncertainty and possibly stymie economic growth, a risk that the market has begun to reflect rapidly.
As we begin a new week, the major indexes are poised around an area of key technical support, with the market uptrend experiencing its most significant stress test since early 2016. A speech by the Chinese president at an economic forum in China on Tuesday, 10th, assumes more weight in determining the near-term direction. Of course, President Trump's tweets on trade tariffs carry just as much weight in moving markets. A further escalation in tariff rhetoric can potentially deteriorate the outlook to warrant a portfolio readjustment.
At the macro level, there is a lot going for the stock market including earnings and economic growth, and a benign interest rate policy. The recent pullback, to a meaningful extent, is tariff related. Any sign of detente can spark a sustainable turnaround, particularly as an anticipated robust earnings season picks up the pace in a week's time.
As relevant information presents itself, we will provide an update if any model portfolio readjustment is required.
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Graycell Advisors