Here’s a fairly comprehensive list of geopolitical events dating back +80y. Consistent with last week’s TalkingPoints – What do geopolitical events mean for stock returns? (2-14-2021), negative/stressful/upsetting geopolitics events develop over the course of a few weeks, lead to sell-offs in risk assets in the range of 5-10%, and generally recover as quickly as they went down. Not trying to downplay some very negative moments in American history here – just trying to draw a circle around what those moments have meant for markets.
Three things I like in the market right now:
- Corporate earnings have been very good/great. Top line revenue growth for 4Q of +16% and EPS growth for 4Q of +26% YoY.
- Investor sentiment has been obliterated. Sentiment as measured by either bull/bear ratio, put/call ratio, fund manager survey – you name it – all flashing extreme pessimism. Advanced markets NEED to climb a wall of worry.
- More and more talk about the Fed going slower when it comes to 2022 rate hikes than two weeks ago. The yield curve hasn’t steepened yet – but it should going forward. That’s something big to watch.
Richard Barrett
Chief Investment Officer
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