One thing that is abundantly clear, the US equity market has been under ongoing pressure from the US-China trade war and with the announcement today of China and the US coming back to the table, a short-term rally is obvious. But I suggest we look past the trade talks and look at these comparisons.
1. Compare December 2018 and August 2019. Both months saw selling driven by the Fed, the Trade War and more recently in August, an inverted yield-curve. Of course the selling in December 2018 was more aggressive and concentrated, but like August 2019, it was driven by negative news cascading into markets and a lot of uncertainty. Investors were confused and were worried about a true meltdown.
2. Compare January 2019 to September 2019 (expectations of market fear fading and investors turning positive). The core themes remain – a month of fear followed by a month of relief. If Trump reduces political theater by 50% in September, S&P 500 could rally aggressively.
S&P 500, Tech, Korea/Kospi, Nikkei 225, and stocks such as Toyota, Subaru, Murata, TDK, Sony, Nidec, Hokuto and Maruwa (small caps look great) are all possible strong performers in September.