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3q-2019-trevor-gurwich-retail

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We do think that there's going to be continued volatility and that volatility is going to be around the trade wars and the issues that the United States and the Chinese government today have in coming to a resolution on that trade war. 2019 has been a pretty exciting year. Returns have been good so far. We had some surprises, though. In May, we were expecting a trade resolution—or at least some type of détente—with China and President Trump. However, that tended to go the other way. So, it was more of a "sell in May" type of event. However, the Federal Reserve of the United States changed their interest rate trajectory. If you remember last year we were on an upward sloping, stair-stepping, increasing trajectory, and now that has reversed completely. So, we're looking to potentially 2 or 3 cuts in 2019, and that we believe has helped really support the market. So, June so far has been a very strong month. The China trade issue with the United States is one that is extremely complex. It is one which goes over multiple cultures. It goes over different time periods of decision making, and there are expectations on each side that are very different.We think that there's probably a 25% probability that there is some type of resolution in the next 12 months. Probably a 75% probability that something happens after 12 months. And there is also I should actually say a probability that it doesn't happen. One has to really decide: Is President Trump trying to put China in a box and contain China, or are we looking for a better deal? What this means as a portfolio manager is very detailed attention to portfolio construction. How do you set up your portfolios so that they can be robust, whether there is a resolution to this trade war or whether this lingers on for longer? And a lot of that is finding opportunities that might be win-win types of situations, whether there's a trade war or relief from that. The IPO market has been extremely robust. One of the great things about the U.S., the non-U.S. and the global small cap market is that we receive 90 to 95% of all new IPOs. These are companies that are coming to the market fully charged with new cash to go out and grow their businesses with very ambitious CEOs who are bringing in new business models. We have seen companies like Crowdstrike, which is essentially providing them some of the most sophisticated data security and Internet security at an endpoint intrusion protection for corporates coming to market. We are seeing companies like Revolve. Revolve is an internet commerce provider that sells fashion items. We're seeing a healthy appetite by investors who see the opportunity of online commerce, who understand the total addressable markets or the TAMs of these businesses and who have a lot of optimism in terms of these businesses supplanting the old world. That is really showing a lot of investor interest right now. We do think that currently the U.S. market is still pretty strong, pretty robust, employment's high. There's a lot of consumer confidence, there's a lot of small business confidence, and if we can overcome these trade war concerns, we can potentially stop the decline in sentiment.

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Duration: 4 minutes and 12 seconds
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Language: English
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Posted by: mariafog on Jul 11, 2019

3q-2019-trevor-gurwich-retail

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