Ablin Sees Credit Conditions Tightening – Time for Some Risk Off

Jack Ablin, CIO of Cresset Wealth Advisors, appeared on Fox Business Network’s “Mornings with Maria” on October 31, 2018. He explained that the short-term outlook for equities is positive because traditionally the markets experience a rally after the mid-term elections. Longer term, however, the days of easy money are gone: monetary stimulus is ending globally, and rates will be rising. Jack points out that we are seeing the removal of a tailwind that we have felt for the more than 30 years. He is not a buyer of equities right now and will consider using the post-election rally to reduce risk. Jack highlighted that he is seeing a deterioration of credit conditions with spreads widening and several major credit card companies lowering credit limits. For investors considering buying into market weakness for the long term, Jack suggests that consumer discretionary, consumer staples and financials benefit as interest rates rise. He points out that emerging markets equities are looking cheap but he is waiting for more positive momentum and greater acceptance from investors before increasing weightings. Lastly, on the subject of China, Jack pointed out that President Xi was already implementing a deleveraging program that tempered growth, but with the added negative impact of trade tariffs the world’s second-largest economy can’t help but be a drag on the rest of the world.

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