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August 20, 2019

The Dow suffered a loss of 170 points today, snapping a 3-day win streak. Wall Street has recovered most of the losses posted in the August selloff but fears of another downleg remain. Trade tensions between the US and China persist, with no resolution in sight and the yield curve flashed a recession signal. If the curve inverts again and stays there, we could have a recession by 2021. It's still too early and the Fed is not pressured to lower rates more aggressively to stimulate growth and combat a recession. The markets are probably going to be range-bound for the short-term outlook. Any hint of a trade deal or rate cut will push the markets higher.