Global Markets – 4Q18 Review

The 4Q 2018 drawdown in stocks resulted in negative full-year returns, but equities were not alone in this regard – as almost all asset classes finished 2018 in the red.

Global equities hit the brakes in the fourth quarter, with all major averages posting double-digit percentage losses to end the year.  Prior pullbacks in the current bull market have often provided an attractive entry point for investors, yet there was a buyer’s strike in the fourth quarter.  The wall of worry simply became too high for equities to overcome, as investors had to contemplate global growth concerns, ongoing Brexit uncertainty, the continued trade skirmish between the U.S. and China, and tightening measures by central banks.  The 4Q drawdown in stocks resulted in negative full-year returns, but equities were not alone in this regard – as almost all asset classes finished 2018 in the red.

The investing landscape was dominated by geopolitical headlines in 2018 – and this theme is likely to continue into 2019.  The market hates uncertainty, so some resolution on fronts such as China-U.S. relations and Brexit would be positive for investor sentiment.

As central banks are in varying stages of reversing the largest global liquidity exercise in history, there is bound to be a corresponding impact on equities.  The U.S. has been normalizing monetary policy over the past eighteen months, while the European Central Bank (ECB) ended its bond purchase program in December.  The ECB continues to maintain a relatively accommodative stance, stating that it will keep its key interest rates unchanged through the summer of 2019, and even then be dependent on relevant economic growth data.  In Cambiar’s view, the investment implication is that selectivity should take on increased importance, vs. the rising tide environment that has been in place for much of the past ten years.

 

 

Disclosures

Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar.  Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements.  The information provided is not intended to be, and should not be construed as, investment, legal or tax advice.  Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation.  Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time, do not represent all of the securities purchased, sold, or recommended by Cambiar, and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts are based upon third-party sources that are deemed reliable; however, Cambiar does not guarantee its accuracy or completeness.  As with any investments, there are risks to be considered.  Past performance is no indication of future results.  All material is provided for informational purposes only and there is no guarantee that any opinions expressed herein will be valid beyond the date of this communication.