What are we watching going forward?
- The rate of new infections globally, as well as the efficacy of containment efforts both in China and elsewhere, are key to determining the impacts on economic growth and investor risk sentiment of the coronavirus from here.
- The Federal Reserve and other central banks are on high alert. We believe the Fed will cut rates if sentiment deteriorates and equities go lower — just like they did last summer and markedly different from their actions in Q4 of 2018.
- The impact of last night’s Democratic debate heading into the South Carolina primary and Super Tuesday is the thing to watch on the political front. The moderate portion of the Democratic party needs to coalesce around one candidate or Sanders is very likely to be the nominee. If we see candidates cancelling fundraisers or appearances in the coming days, that would be a signal that the Democratic party has started the winnowing process, which the market would most likely view favorably.
As we have discussed in the past, volatility is not irregular in markets. Unexpected events can happen, and it is important to be prepared with a thoughtful and well-disciplined investment process. Should you have any additional questions or comments, please reach out to your primary Horizon Investments contact.
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