By Sungarden Investment Research via Iris.xyz
As I thought about key investment trends and themes heading into 2019, it occurred to me that they had one thing in common: they all begin with the letter T.
Here they are:
TARIFFS – this is the market’s current obsession, and with good reason. Decades of benign disagreements about trade policy between the U.S. and China, Asia, Europe, and just about everywhere else in the developed world have turned from push to shove. 2019 is likely to bring some resolution, and I don’t mean the New Year’s kind. That will cause markets to react, one way or the other…and probably both.
TREASURIES – the only reason that the bond (credit) markets are not a bigger headline for investors is because the stock market is grabbing all of the attention. But once the stock market bear becomes more mature, the focus will turn to the trouble in bonds. U.S. Treasuries are saving 60/40 and other balanced-type investors from much steeper losses in 2018. But corporations have a ton of debt, as do consumers. Frankly, so does the U.S. Government, but they can print money to push their problems further into the future. For the other major segments of the economy: not so much. This will likely add to the simmering pressure on high yield and other corporate bonds.
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