Managed Portfolio Quarterly

Third Quarter Update – “Market Noise”

Summer has now come and gone, and was most notable perhaps for the lack of sunny days and seemingly constant barrage of stormy news in the markets. The EU Brexit saga and the continuing US/China trade talks were a cause for concern.   Add in US politics, impeachment talk and a yield curve inversion to the mix and conditions seemed right for a perfect storm.

However, the risk of global recession is being tempered by central banks as they have lowered interest rates with the intention of providing fiscal stimulus. The Fed cut rates by 25 basis points and the ECB announced a broad-reaching stimulus package. Meanwhile, the Bank of Japan, the Bank of Canada and the Bank of England kept their policies on hold but signaled a willingness to act.

Regarding geopolitics, an attack on Saudi Arabia’s oil infrastructure removed 5% of global supply and sent crude prices soaring. This move quickly reversed as production was restored and tensions eased.

Going forward, formal trade talks between the US and China are set to resume after a chilly hiatus of several months.  The US economy is starting to join China in feeling the impact of their trade tensions which could increase the motivation to get a deal done or become a distraction and make a deal more difficult.  Through all of this, the risk of imminent recession is still on the horizon but currently subdued.  Many of the common indicators are still not signaling recession.

As in all weather patterns and markets, storms do come and go and seasons change with time.   The key to a good portfolio management strategy is to aim to take out the emotional element of investment management and filter the above “market noise.”  Ensuring your portfolio risk is aligned with potential market conditions, is my top priority.

Should you have any questions regarding the above, please contact my office at (403) 945-8237.

Bryan Muir