It’s been a rough start to the week (or an exciting start, depending on your perspective) as a result of reescalating trade tensions between the U.S. and China. On Sunday, President Trump stated that tariffs on $200 billion worth of Chinese imports would increase from 10% to 25%, and that another $325 billion in goods could fall under the 25% tariff “shortly.”
Article Category: PMI Data
We saw a strong rally in global equity markets yesterday, and much of that move was predicated on an improving Chinese landscape. On Sunday, the official Chinese Purchasing Managers’ Index came in at 50.5 (for March), signaling expansion for the first time in four months. The previous reading of 49.2 represented a three-year low.
There have been quite a few interesting developments over this past week, so we have a lot to cover. I want to begin by drawing your attention to the divergence between stock prices and bond yields. We discussed this back on March 5th, but since then, things have deteriorated even further.
I want to begin today with a look at ACWI - the All-Country World Index ETF, which you can see in the top panel below. This ETF tracks the MSCI benchmark and provides exposure to large and mid-cap companies across 23 developed markets and 24 emerging markets. Approximately 85% of investable global equities are included in this index.
I’ve been in the retest camp for some time now, expecting the market to plumb the lows from Christmas Eve, but the market has steadfastly moved higher. In part this is due to earnings coming in better than expected (and guidance not being as awful), but I also believe a lot of it has to do with the marked shift from Fed Chairman Jerome Powell.