A Message from David Burrows
While I am sure that markets will have a jolt this morning, here are some key points to consider:
1 – Our ears in Washington tell us that there is a broad framework for a trade deal in place which includes most of the key points investors are looking for.
2 – Despite Trump’s tweets, it appears the Chinese delegation remains scheduled to make the trip to Washington this week to work at completing a deal.
3 – With Trump’s tweets in China blocked by the state, there is less risk of embarrassment to Chinese leadership.
4 – Earnings have been coming in above expectations and both US and Euro economic data is now showing early renewed strength.
5 – Global financials have been firming up over the past month as data has been improving – an important signal that we have begun the next up-leg.
6 – Monetary policy and financial conditions have been easing over the last three months and are supportive of risk assets.
While idiosyncratic events can impact markets in the very short run, when the backdrop is favourable coming into the event it is as though the markets are riding on shock absorbers and the impact is less than one would expect.