13 December 2018: The birth of tragedy?
– The Fed, politicians, and investors face an internal battle between Apollo, the rational, and Dionysus, the emotional.
– We think equity markets are more likely to rise than fall over the next six months, with the risk of a recession low and valuations still attractive.
– Fed policy, escalating trade tensions, and poor sentiment could all weigh on markets.
– We remain overweight global equities while maintaining our portfolio hedges. We also add an overweight to the Canadian versus the Australian dollar as well as an overweight to EM equities versus Swiss stocks.