Updated: Feb 6
During the week the big economic & political news were indications that manufacturing in the US contracted more so vs expectations in December (ISM manufacturing report) while in China it accelerated. Whether the US manufacturing slump will continue despite Phase 1 trade resolution is the big question. Secondly, the air strike on a Iranian military leader has introduced more uncertainty on the economic front as well. Often, based on history, we have seen geo-political events used as excuses to ratchet down expectations for growth temporarily and this case maybe be no different it seems.
One other note was that the Federal Reserve minutes indicated a waning of the massive REPO related flood of printed money sometime in January. This can not be underestimated in its importance if true.
With expectations for growth remaining high, we continue to favor themes that are less tied to those expectations and that we deem reasonably valued. Cash levels remain relatively high across our model portfolios vs historical's as well.
For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can effect your finances.