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The Weekly Track reconvergence-2

- The Weekly Track – Reconvergence by Bob Savage
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Don’t expect the quality and success of any journey to stand on how it starts, this is a marathon not a sprint. Two clock paths that feed into a time series suffer clock reconvergence pessimism. Perhaps in the new world of computer aided trading and thinking we all suffer from this bias. However, history is on the side of the optimists – there have only been 4 times since 1929 when the S&P500 fell in back-to-back years – and those were in recessions, the oil crisis and in wartime. The last time being 2000-2002. The history of trading markets over the last 40 years has been about convergence where global markets sprung up from the push for a global economy after the Pax Americana at the end of the cold war with the Soviet Union. The inclusion of China in the WTO in 2003 and the sprint of the emerging markets to catch up to the developing world brought 3 billion people out of poverty. The great recession gave pause to this movement and last year the Trump foreign polic
y and trade tariffs brought further doubts about how history plays out into 2019. The first trading 3 days of 2019 proved more exciting than those of 2018 as the fear of a bear market requires more diligence than running with the bulls. We end the week with many rethinking their gloom with renewed talk of Goldilocks, where US growth is better, rates are not restrictive and global tensions ease. For those interested in history here is the January 7 Weekly Track from 2018 – outlooks and lookouts. For those looking for just how bad 2018 was, consider this chart from DB – the USD returns of all assets was the worst in history.