2019 Genus Quarterly Review Q2

The highly anticipated G20 meeting between President Trump and President Xi ended with no clearer conclusion on the future of the trade relationship between US and China. Both sides are buying time to allow local business to adjust their supply chains and plan out a strategy for an extended trade war. The discrepancy between the bond market and the US Federal Reserves’ guidance is widening as the markets are pricing three rate cuts vs the Fed’s one or two guidance by the end of the year. Our positioning still remains defensive as the impacts from the four rate increase from last year are still filtering through the economy and until the Fed speak becomes action, we will remain defensive. Globally, the economy continues to be weak, in particular Japan and Europe, We expect our models will remain defensive until monetary stimulus kicks in and economics indicators begin to reverse upwards around the world.

Watch Mohamed A. El-Erian’s interview on CFA here.