Weeks 1 – 2:
Looks like things have decided to cool off and things are relatively stable. Trump and the Chinese can still cause a major disruption so be prepared. Since you can’t know when things might change and it is political rather than fundamental it is probably best to plan on holding through any disruption. That said, panic selling is always a buying opportunity so I’d have some cash on hand.
Stocks to look at for growth are JLL, CBRE, and CIGI. ETFs are BBH, FCOM, and OUSA. Dividend growth stocks to consider include AVH, RIO, WPP, and ASRT. Expect TLRY to soundly beat its expected earnings on 3/18/19. Good investing!
Weeks 2 – 3:
The yield curve inversion is not that big of a deal . . . but we always explain it away and then have a recession. Generally, when short rates are greater than longer rates, it indicates a slowdown in economic growth because longer rates increase only if private sector investment borrowing coupled with inflation are increasing because of accelerating economic growth. The US is slowing down a bit, but the economy remains on good footing. It is global growth that is feeding back into the yield curve. Our rates are simply higher and international capital flows are about ten times those of trade flows. Foreign money flows in to buy US treasury bonds when foriegn rates fall, as they are now. This bids up the dollar, which is relatively strong, along with bond prices. This, in turn, decreases bond yields and explains a lot of the yield curve inversion. Trump’s trade policies are at the heart of the global slowdown and will eventually lead to a recession in the US unless a deal with China is reached and trade isolationism ends before that happens. Trump’s trade policies are also why the Fed cannot continue to reduce its balance sheet and prepare for the next recession. A socialist in the White house would then want to use Keynsian fiscal policy to bury us for good in a insurmountable level of government debt. We would then be at the mercy of the IMF for access to credit (foreign capital inflows would dry up due to the lower credit rating). We would be put on austerity measures (very high taxes) because of IMF conditionality requirements. As with Greece we would expect to spend eternity digging our way out of the mess.
Now that the long-run path to austerity measures is laid down, lets consider the next 12 to 30 months. The band will still be playing party music on the deck of the titanic and the markets should be going up. Consider the growth stocks IIPR, CAPL, CRMT, XLNX, AVX, and AVID. ETFs that look strong are PSJ, XSW, and PXMG. Dividend growth stocks are EQM and BGCP. Good investing!
