Trade war drama has challenged U.S. market sentiment, but this story has been a re-run for the past year.  Even though tensions will remain high, we still believe a near-term recession is only a remote possibility as the latest monthly job reports continue to be favorable.  On an annual basis, we import over $500 billion in Chinese goods and services, but export less than $150 billion, for a net deficit of nearly $400 billion.  (see chart) 

This trade imbalance with China represents about two-thirds of our entire global trade deficit of $565 billion, which itself represents roughly 3% of total U.S. GDP.  While yesterday was the worst market day for U.S. stocks in 2019, it will likely be viewed as another short-term swing by year’s end. The good news is that American companies have been resilient over time and are likely to learn how to compete globally with less dependence upon a low-cost Chinese supply.  Well-diversified portfolios are less vulnerable to these short-term fluctuations, with bond investments rising as stocks retreated.  Always check with your financial advisor to help rebalance your holdings as needed to meet your long-term financial objectives.