June 28, 2018
Dear WEALTHTRACK Subscriber,
One of the most difficult tasks that investors face is discerning the difference between the noise of the markets and the substance. It has become even more challenging than usual in the Trump era as the President disrupts long standing practices and relationships.
The President’s unexpected rejection of a G7 communique was a prime example. As the Financial Times wrote it left closest allies in turmoil and threatened more tariffs.
Contrast that with positive news about the U.S. economy revving up, as The Wall Street Journal reported having more job openings than jobless for the first time since those records were tallied 18 years ago.
Last year when confronted with contrasting news headlines and political tensions the markets seemed to shrug it off and climb. This year uncertainty seems to be taking its toll as the markets became much choppier. As a recent Wall Street Journal article asked, are we seeing The Return of the Political-Risk Trade? The Journal cited a widely used Global Economic Policy Uncertainty Index, which tracks mentions of the words “uncertain” and “uncertainty’ in major newspaper articles about economic policy. It recently rose to the highest level in a year. In addition, according to a recent survey by Ernst & Young “Geopolitical instability is now the number one concern for companies investing in Europe”. In its last survey, taken in 2016, it was number five.
How much do politics matter to the markets? What is noise? What is substance?
This week we are fortunate to be joined by two of the wisest men in global finance. They were colleagues many years ago at Salomon Brothers and have remained close friends ever since.
John Lipsky Is Distinguished Scholar at Johns Hopkins University School of Advanced International Studies (SAIS) and Senior Fellow at its Foreign Policy Institute. Before that he served a five year term as the International Monetary Fund’s First Deputy Managing Director and during 2011 was its Acting Managing Director. He holds several other leadership positions at prestigious organizations including Vice Chair at the National Bureau of Economic Research. He received a PhD in Economics from Stanford University.
As did Nick Sargen, an international economist turned global money manager. Sargen is now Chief Economist and Senior Investment Advisor at Fort Washington Investment Advisors, an Affiliate of Western & Southern Financial Group, where he had been Chief Investment Officer. Sargen, who held several chief economist and strategist positions at major banks and investment firms is the author of two books, Global Shocks: An Investment Guide For Turbulent Markets, and his just published Investing In The Trump Era: How Economic Policies Impact Financial Markets
What substantive difference is the Trump presidency making to the economy and markets? That is the topic of our WEALTHTRACK discussion.
In our EXTRA feature on wealthtrack.com Sargen will share his observations of Chinese attitudes toward recent trade disputes from his recent trip there and Lipsky recommends what he calls the definitive book on the history of U.S. Trade policies, which should be required reading for current trade officials.
If you are unable to join us for the show on television, you can watch it on our website, WealthTrack.com over the weekend. If you’d like to see it earlier, it is available to our PREMIUM subscribers right now.
If you would prefer to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACK podcast on TuneIn, Stitcher, and SoundCloud, as well as iTunes. Find out more on the WEALTHTRACK Podcast page.
Have a great weekend, a super Fourth of July and make the week ahead a profitable and a productive one!
Best regards,
Consuelo
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