One Sell-Off, So Many Causes

Unlike February, the current global equities correction has real causes. We dismiss concerns about Fed tightening. The US mid-term elections are moving in the right direction for continued growth, except that this emboldens Trump to prolong the trade war with China. Every day is another day with tariffs acting as a corporate income tax hike, and every day is another day with China being backed closer to a systemic cliff. It's a game of pressure, so Trump has to be willing to scare investors or he's not going to scare China. China is isolated, and will have to make a deal, and we think Trump does want a deal rather than a prolonged Cold War. The Italeave threat is upon us. It will likely end with compromise, but already pro-growth tax cuts have been mostly abandoned. Security issues continue to dog the FANG stocks, raising existential angst in the bull market's leadership group. Some of these -- especially China -- are real and persistent issues. But altogether, we're regarding this as only a correction, not the onset of a new bear market.