Bundle Up

Happy Friday,

US - China trade deal & market reaction once again confirm the Buy the Rumor, Sell the News nature of risk assets. Broad China equities up ~15% and S&P 500 up ~11% over past 3 months.

While US - EU trade is up next and US/Iran friction remains hot, risk assets continue to (correctly) focus on our Lower for Longer Global Growth Path = Higher for Longer Stock Prices mantra.

China data is supportive of an L shaped recovery while the rest of Asia shows signs of picking up.

Broad European equities are in full “Show Me” mode only up ~8% in the past 3 months, even while Bunds sell off meaningfully and it’s Econ Surprise Index has rocked. Europe’s Green Deal remains a focus as back door stimulus - see Germany.

The last of our Big Four Signposts, earnings (other 3 are: easing cycle, trade truce, global growth bottom), looks to be coming into focus as Q4 earnings should mark an earnings cycle bottom.

While geopolitical headlines remain front and center even America’s 3rd Impeachment in its near 250-year history has not been enough to cause a (healthy) market pullback.

Super Tuesday may change that; it is the likely roadblock up ahead (March 3rd to be exact) as the progressive candidates of the Democratic Party could do well, spooking complacent markets. How complacent? Just check out the publicly listed Private Equity companies over the past few months… no Liz Warren fear there.

Late to the party equity investors have hopped on the existing winners: US, Growth, Tech, creating some consternation in those advocating leadership changes...watch US transports - a breakout could support the leadership shift camp. Remember Dow Theory?

It's nice to see winter temps finally descend on Manhattan - just in time for the Davos crowd to add to the carbon load in order to talk about how bad climate change is…

TPWIM will be down in Florida for the Inside ETF Conference. Jay is speaking on the 2020 Alpha Panel on Tuesday afternoon and we would love to connect if you are down there. Let us know.

TGIF and stay warm!

TPW Investment Management Team