As the possibility of a trade war recedes, markets are looking set for an upward thrust.
A waning trade war notwithstanding, we should not be completely complacent regarding war.
Unfortunately, it's folly to feel trading and warring are mutually exclusive.
Indeed, UK/German trade steadily increased until the outbreak of World War One. Also, the US and Japan were trading partners until mid-July 1941, just a few months before Pearl Harbor.
As we’ve talked about in the past the world is increasingly multi-polar.
Ebbing US geopolitical clout means China, Europe, Russia and Japan will only increasingly vie for regional - and in some cases perhaps even global - hegemony.
We don't foresee a world war. (But let's face it who ever does?) Rather, there's little doubt China aims to dominate its near abroad.
Just as a burgeoning US drew its own sphere of influence with the Monroe Doctrine (circa 1820s), Chinese aggression in the South and East China Seas is likely a matter of "when" not "if" (circa 2020s).
Such possibilities beg the question - do defense/aerospace stocks have a rightful place in a socially conscious portfolio? Perhaps in some cases and for some clients they do.
Monthly Markets Update, October 2019
Last month, the S&P 500 was up 2.17% even as the Dow Jones increased 59bps, the Russell 2000 added 2.63% and the Nasdaq was up 3.71%.
As for US bonds, they added 30bps.
Globally, the MSCI World Index increased 2.57% and the Barclays Global Aggregate Bond Index was up 67bps.
The Euro Stoxx 50 added 1.11% in local-currency (Euro) and 3.36% in USD. Meanwhile, the Topix added 4.99% in local-currency (Yen) and 5.16% in USD.
