Uncertainty is the word on the street these days as investors seem focused on geopolitical risks. Despite that underlying disquiet, bonds, stocks and alternative investments have all posted strong returns so far this year with the S&P 500 plus 21% and bond returns of 5-6%.
This broad‐based positive performance masks the tension underneath the surface, which can explode into market‐moving trend reversals on little news. For example, recently two “winning” investment trends in 2019 experienced dramatic reversals when the relevant “story” changed:
What's critical to note here is neither of these reversals was triggered by new fundamental data about companies and their economic prospects. Rather, the driving force was an easing of the geopolitical uncertainty, as investors embraced a positive outlook about U.S.‐China trade. So, what's needed now?
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