The S&P 500 declined 0.50% last week on a flurry of news and sometimes-contradictory headlines. Some weeks, just trying to keep track of it all makes our head spin. A few of the headlines we have had to digest over the past several days are included below.


On the Middle East:
Saudis Face Lengthy Oil Halt with Few Options to Fill Gap – Bloomberg
Saudi Oil to Return to Full Production by September, Aramco Vows – Bloomberg
Crude Rebounds on Renewed Concerns about Saudi Production – Wall Street Journal
The Saudi oil attacks could be a precursor to widespread cyberwarfare – CNBC
Trump wise to avoid a devastating war with Iran in wake of attack on Saudi Arabia – FoxNews
Trump and Iran may be on the brink of a war that would likely be devastating to both sides – Business Insider

On the Fed:
Fed loses control of its own interest rate as it cut rates – CNBC
The Fed Isn’t Losing Control of Money Markets – Wall Street Journal
Fed Officials Explain Dissents from Rate Cut – Wall Street Journal

On Trade:
Trump Says He Wants ‘Complete Deal’ with China – Wall Street Journal
China Detains FedEx Pilot Amid Rising U.S.-China Tensions – New York Times
Despite Tough Talk, U.S.-China Trade Negotiations Continue – New York Times
Global Economy Seen Sliding Toward Weakest Growth in Decade – Bloomberg
China Cancels US Farm Tour, Stoking Pessimism on Trade Deal – The Straits Times, Singapore
China-US Farm talks Achieved ‘Good Outcome’: Chinese Official – AlJazeera

On Stocks:
Paranoia Written All Over S&P 500 in Struggle Back to a Record – Bloomberg
Stocks will soar 17% through next year, market bull Ed Yardeni predicts – CNBC
Three Market Shocks and Investors Say ‘No Problem’ – Wall Street Journal

On Protests:
Climate Change Protesters Rally Around the Globe – Bloomberg
Clashes Erupt in Hong Kong After Dueling Demonstrations – New York Times

It is weeks like this that we have to remind ourselves that near-term uncertainty will always be with us. We invest in equities with the belief that, in retrospect, near-term uncertainty will morph into long-term growth. Likewise, market volatility is the price of admission to long-term returns. We don’t know whether Saudi production will be back online this month or this year. We don’t know if there will be a “kinetic” strike against Iran in addition to heightened sanctions. And unlike Ed Yardini, we don’t know the market will be up 17% through next year (see headline above).

There will never be a bell that rings to signal when to get in or out of the market. We believe the best thing to do is avoid the noise and spend time focused on finding great companies to own that have successfully navigated it “all” before and will be able to thrive well into the future. That is what we seek to do at Haverford. One of the ways you test a company’s resiliency to uncertainty is their ability to pay a stable and increasing dividend. It may sound old-fashioned, but isn’t that the exact opposite of near-termism?

This morning, September 23rd, the Eurozone flash manufacturing Purchasing Managers’ Index (PMI) for September came in at 45.6, below expectations for 47.3. A reading below 50 is indicative of contraction. The services PMI was 52, better but still below expectations of 53.3. In Germany, the flash manufacturing PMI sank all the way down to 41.4 with services at 52.5. Investors had been hopeful the Eurozone could stabilize given they were already sitting at very low levels, but clearly that did not occur in September. Germany’s export-dependent economy appears to be suffering more than either China or the U.S. from global trade uncertainty. This data is consistent with the comments made by the FedEx CEO last week on their earnings conference call. “A big victim… of the China slowdown is Europe.”