The recent news that Bridgewater Associates’ flagship fund—the Pure Alpha fund—lost 4.9% in the first half of this year should underscore the unpredictability of markets, according to a recent article inBloomberg.
The article cites the performance of the SPDR SSgA Global Allocation ETF, which tracks the broader markets and was up 12% for the year (as of July 19th). The article notes two takeaways:
· “The globalization of the world economy in recent years means that the performance of assets has also become more globalized, with more markets moving in tandem instead of going their own ways;”
· “Central banks are more directly involved in markets than ever before, helping to damp volatility.”
The article highlights other market trends: specifically, that BlackRock upgraded its view on European assets based on its view that the ECB is becoming more dovish:
On the currency side, the article reports, trade talks with China are leading strategists to expect a weaker yuan. “Beijing controls the yuan tightly, of course,” it says, “but it would be logical to expect the authorities to guide the currency higher against the dollar if they truly wanted to extend a goodwill gesture toward the U.S. given how much American authorities complain that the Chinese currency is too weak:”
The article notes that although the global stock market has seen a rebound, emerging market stocks continue to lag: “The performance suggests that investors don’t believe emerging economies will be immune from the escalating trade wars between the U.S. and its chief trading partners.”
