Trade Wars Heat Up, Manufacturing Cools Down
Trade tensions, combined with uncertainty about central bank policies around the world, mean more market volatility is likely to come our way in 2019 and 2020.
Markets like stability. Trade tensions are destabilizing, and are now having very measurable economic impact. While the recent threat of tariffs against Mexico by the Trump administration did not come to pass, tariffs and trade wars have already begun taking their toll on global trade. The month of May saw a contraction in manufacturing globally based on the Global PMI Indices. May also saw the first measurable decline in three years in the services industry, which analysts believe is being directly impacted by the manufacturing slowdown.
It’s important not to get skittish. Aggressive investors with long time horizons can take the hits and ride through the storms. Even so, we see benefits from the more stable nature of many of the companies in our ESG / Socially Responsible portfolios — these stocks are often less volatile than the overall market and are less likely to experience major drawdowns. We also look to balance portfolios with tilts toward low-volatility stocks and other stabilizing factors such companies with strong female leadership, which have historically offered higher return on equity than their male-led counterparts.