24 January 2019: Autopilot shutdown
– Equities have rebounded from December’s sharp fall after encouraging rhetoric about Federal Reserve policy, US- China trade, and Chinese stimulus measures.
– Recent data releases point to stabilization, but global growth has slowed versus 2018.
– Optimistic US-China trade talk now needs to be followed by concrete action, and, with no 2019 US rate hikes priced in, investors should be mindful of policy disappointments.
– We keep our hedged overweight position in global equities, but reduce risk exposure by closing our overweight position in emerging market sovereign debt, while adding two new relative value trades.