Market Commentary: The Market Plot Takes a New Twist
SEI has issued its Second Quarter Economic Outlook for 2018. The outlook contains information about:
- Investors were raging bulls at the beginning of 2018 as equity prices vaulted higher. That optimism faded dramatically as the news flow turned less favorable.
- If one believes, as we do, that the global economy is sound and the political uncertainties roiling markets will be contained, then the proper course is to maintain exposure to equities and other risk assets.
- Sabre-rattling between America and China, meanwhile, has deteriorated into actual skirmishing, and the latest back and forth suggests this spat could get worse before it gets better.
- A trade war will lead to higher prices for consumers and hurt the bottom lines of companies that sell imported goods and depend on global supply chains in their production process. The result is a net loss for society.
- We want to emphasize that this is not our base-case scenario. We still think this old bull has some life left in it. That said, the risks to the equity market now seem more balanced rather than skewed to the bullish side.