The current equity market rally extended into 2018 but with much higher volatility. The bumpy path of the stock market reflects investors’ deep fears of the head and tail winds that can derail the current robust growth of US economy: rising inflation and trade war.
We expect a full blow-out of trade war is unlikely, but the risk associated with the continuous rising inflation is easy to be underestimated.
Either an inflation spike or an over-hawkish Fed can negatively impact the economic growth and even cause a recession.
In terms of portfolio implications, this research explains why DAA and DAY, which all belong to the Nasdaq Dividend Achievers index family, can be better substitutes to the pure beta broad market equity indices at this uncertain time.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.