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New economic numbers suggest moderation in global growth rate

Global economic growth is always an important issue for markets, Eitelman said, as it typically drives equities higher over time. Since the middle of 2016, the world’s economy has been in a positive acceleration phase, he said—in other words, a period where global growth has increased each month. However, from Eitelman’s vantage point, there are now some early indications that growth may be starting to moderate. “Tentative evidence of a bit of a moderation is coming through in both recent global Purchasing Managers’ Index™ (PMI) data, and in earnings growth estimates from analysts,” he stated—“and markets will be watching this carefully, to see if this could be a bit of an inflection point.”

Eitelman added that in the U.S., more signals may be emerging, such as a decline in consumer spending. “The country just logged its second month in a row of weaker retail sales growth, and we’ve also seen some moderation in housing market activity,” he noted. In Eitelman’s opinion, this could potentially lead to a downward revision in U.S. growth estimates. He added that beyond the U.S., economic growth still looks pretty good, particularly in China. “Overall, the global growth story appears to be a bit of a mixed bag today,” he said—“but broadly speaking, we are seeing a slight moderation from very healthy levels.”

Uncertainty over potential U.S. tariffs on China impacting markets

Switching to the topic of trade wars, Eitelman said that the uncertainty surrounding the Trump administration’s plans for tariffs—especially on Chinese imports—is weighing heavily on markets. “News broke this week that the White House is mulling tariffs on roughly $60 billion worth of Chinese products, in response to a government investigation into Chinese intellectual property theft,” he explained. In Eitelman’s view, this amounts to a negative surprise for markets, especially because it’s unclear how China will respond to such a move. The news already appears to have had an impact, Eitelman said, noting that generally speaking, global equities moderated a bit the week of March 12.