Around the world in 80 seconds
The Greenport Global Market Update will be a regular update sent at the end of each quarter. It’s a quick trip around the world observing and commenting on performance of global financial markets for the prior quarter, YTD, 1 Year, 3 Year, 5 Year, and 10 Year. We have selected markets that represent a broad array of global investments, but if there is a market you would like us to include, please let us know and we will add it. Returns are annualized.
We clearly derived our title from Jules Verne’s famous novel, “Around the World in Eighty Days.” It’s a wonderful book but also another reminder of how disruptive technologies have so dramatically changed the world in such a short time. After soaring out of the gates in 2018, world stocks markets retreated during February and March and closed the quarter generally down. The initial surge was due to optimism over global growth and the Tax Cuts and Jobs Act (TCJA) passage. As the quarter continued on, fears over a trade war, higher interest rates, and political instability led to markets retreating. The U.S. outperformed Europe and Asia, however the U.S. Dollar weakened against all major currencies. Therefore, un-hedged international investments performed in line with U.S. markets. The U.K. continues to be a notable underperformer as uncertainty over Brexit continued. Interest rates rose materially during the quarter, the 10 Year treasury bonds increased almost a half percent. Needless to say, volatility rose dramatically during the quarter. We continue to expect world stock markets to generally move higher. Global corporate earnings are setting records, which should further continue as TCJA goes into full effect. Inflation is not a problem, and we don’t expect it to become a problem. We believe there is far more capacity in labor markets than traditional measures would imply. The US Dollar will likely continue to weaken due to more international capital expenditures and flow of funds data. We see the repatriation of US Dollars from the TCJA as largely an accounting repatriation, not an actual movement of physical currency. We do acknowledge that an actual trade war would be devastating but continue to expect more noise than action. Both sides have too much to lose. Have a great week and do your best not to let the daily moves unnerve you. As the longer-term numbers show, things usually work themselves out. The Greenport Team