Market Commentary

 

 

 

SEPTEMBER 2019

 

 

The rumor mill continues to turn. When we looked at the markets last month, we pointed out a fairly miserable August, and some of the concerning developments in the market like the inverted yield curve. As we mentioned then, the market remains highly sensitive to rumors about what the Federal Reserve will do and possible developments in the China/U.S. trade situation. We have seen that play out in the last week as a mention of some future talks between the U.S. and China has sent the indexes scrambling higher again. Mind you there has been no solution, just rumors of talks, but still the markets have seen this as a positive development. Below we see the market trying the highs again after a super choppy month of August.

 

 

Economic data for the month were decent but not excellent. Gross Domestic Product (GDP) was released at 2.0% exactly as expected. Retail sales were 0.7% higher exceeding the 0.3% expected. And finally, the jobs numbers were a little weak with non-farm payrolls adding 130,000 jobs, 28,000 short of expectations. This data continues to stay positive, but we must keep in mind the weakness that we are seeing around the world. Within emerging markets, China and India have been slowing to 6% and 5% respectively. Japan and the Euro zone economies are not in recession but are just barely holding above the zero line. When examined as a globe, the picture is not so rosy.

 

We continue to advise caution in portfolios and the latest run up offers an opportunity to make adjustments. Earnings have been okay, but at some point, the global slowdown will have an effect on the U.S. economy. For now, it is the rumor mill that is driving things and we could definitely see more volatility. However, we know that eventually markets will catch up to the fundamentals and we do see ample reason to be cautious.

 

 


Disclaimer: Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of securities. Investments involve risk and are not guaranteed.