“We should keep on going along the path of globalization. Globalization is good... when trade stops, war comes.”

Spoken by a true master of trade, Jack Ma.

Seeing a report out of the Netherlands this morning about global trade in the first quarter shrinking by 1.8% has to make you worry a little bit.
Granted, there are several factors that impacted those numbers like the ongoing trade negotiations between China and the US and emerging economies slowing growth. It still makes you wonder how that will play out going forward.
We do know that the negotiations are continuing, and the expectation is that there will be a signed agreement sometime in the second quarter. We also know that the Chinese government is doing everything it can to maintain that enviable( but unsustainable) 6.9% growth rate they love to brag about.
However, cycles are cycles, and this is typical for a global economy that has been expanding for pretty close to 9 years. The party has to end at some point, and it looks like last call to me.
A global slowdown will impact the US economy in more subdued ways, but we will still feel it and the markets could potentially react negatively if the slowdown continues.
The US economy is showing some signs of slowing down but none of the data points lead you to believe a recession is eminent. What you will be hearing a lot of is a “soft landing”. This is one of those rare instances that I agree 100% with the herd and expect to see a soft, slowing of US growth and while some industries will be impacted more than others, I don’t see that worst-case scenario of rising unemployment and negative growth.
In addition, while I don’t expect it to happen, the Fed has the limited ability to loosen credit to prevent a recession.
I do think that the solvable puzzle of trade and sanctions will be resolved and that, for the time being, has been a heavy burden both countries have shared. The slowing of emerging markets probably will be mitigated by a reviving Chinese economy and their unquenchable desire for commodities.
The downcycle of trade will be short-lived and there will be continued growth globally, albeit and a more moderate pace.
I am still in a wait and see mode, so we remain the same.

50% Stocks
25% Fixed Income
25% Cash

BTW, my model portfolio was up 11% in the first quarter and I did not beat my benchmark for only the second time in five years. Time to get more aggressive?