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May You Live in Interesting Times

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“May you live in interesting times.” I recently saw this common saying in an ad for the Biennale, the annual contemporary art extravaganza in Venice, and it made me smile a little at its irony.  Interestingly, though this English phrase sounds like a blessing, its origin is actually a Chinese curse.  “Interesting times” tend to bring disorder and conflict, vs “uninteresting times” marked by tranquility and peace.  And WOW, do we live in interesting times…

May has not been a stellar month from an equity standpoint.  The S&P 500 is off around 5% going into the last trading day, which is also indicated down, theoretically driven by yet another Trump tweet about the economy.  A 4-5% drop in equities in a month is not a remotely rare event, and we’ll see if he tweets again to pull the futures out of the red.  However, 10 yr US Treasuries are up about 4% for the month of May to date.  This is a little more rare, and taken in tandem with the drop in equities of the same magnitude, has historically been an indicator of a coming rally.  I know, you’ve probably glazed over at this point – data, data, data…

So back to the relevance of the “interesting times” quote…. Between trade talks with China, trade deals with Mexico and Canada, and the prevalence of social media, one would believe that the only factors driving our markets are disorder and conflict.  When in actuality, our economy is fundamentally healthy.  Could prolonged talks with China cause the economy to slow?  Sure, but economic slowing is not the same thing as a negative economy (recession), and yet the word “recession” has seen a spike in Google searches. Thank goodness for Google search…

Perhaps the impact social media has had on our emotions, and apparently our markets, is to promote “interesting times” – whether those be based on fundamentals or fear alone – at the expense of the “uninteresting” factors that are truly underpinning our currently healthy economy.

In other words, I do not believe that the declines in May are a tradeable event, but are instead an emotional response to the “interesting times” in which we live.  So sit tight right now, and remember to anticipate your cash needs.  And as always…

Keep looking forward,


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