Market Update: Wednesday, October 10, 2018

LPLResearch-Macro-View

Daily Insights

  • LPL Market Signals Podcast. In the latest episode of the Market Signals Podcast, listen to Equity Strategist & Portfolio Manager Jeff Buchbinder and Chief Investment Strategist John Lynch discuss Fed Chair Jerome Powell’s speech at the annual meeting of the National Association for Business Economics, as well as some of the factors pointing to continued strength in the economy. Market Signals by LPL Financial is now available on iTunes, Google Play and Spotify. Please join our discussion on social via #LPLMarketSignals.

  • Producer Prices rebound. After softening over the summer, September saw the Producer Price Index-a measure of the prices businesses receive for their goods and services-increase by 0.2% month over month. Despite the recent softness, prices at the producer level have been ticking higher since early-2016, though most of the increases have been absorbed by businesses instead of being passed along to consumers thus far. The overall trend generally aligns with other inflation data, such as the Personal Consumption Expenditures Index, all of which support the Federal Reserve’s plan to continue its gradual rate-hike campaign.

  • Mnuchin wants currency to be part of trade deal. With China’s currency, the yuan, down significantly this year, U.S. Treasury Secretary Steve Mnuchin indicated that currency has to be part of any trade deal with China. Mnuchin did not specifically suggest officials were manipulating the currency and acknowledged that multiple drivers are behind the yuan’s fall as the government looks to protect the economy amid decelerating growth and increasing tariffs on exports to the U.S. However, the comments come as the yuan, which is pegged to the U.S. dollar, was set at its lowest daily reference rate in over a year. Despite the yuan’s recent weakness, it remains relatively strong versus other currencies given its peg to the strengthening dollar.

  • Light at the end of the Brexit tunnel; Italy stands pat on budget. According to the Wall Street Journal, UK and European Union negotiators have addressed longstanding issues over Northern Ireland. Specifically, avoiding the emergence of an official border on the island following a formal exit from the EU, and how the agreement should be enforced. Though not a done deal, both sides expect an agreement could be ready in time for EU summit next week. Meanwhile, Italian bonds resumed their selloff with 10-year yields hitting multi-year highs as government officials intend to move forward with a 2.4% budget deficit plan-much higher than the 2.0% agreed to by the previous administration-in the face of pushback from the EU, the Bank of Italy, and country’s budget office. While the UK appears to be on a tentative path to separation from the EU, the process is far from over; and the upheaval in Italy is another example of the political and structural concerns that support our cautious outlook on foreign developed markets.

LPLResearch-Monitoring-the-Week-Ahead

Click Here for our detailed Weekly Economic Calendar

Wednesday

  • PPI Report (MoM, Sep)
  • Wholesale Inventories (Aug)
  • UK GDP (Aug)
  • Japan PPI (Sep)

Thursday

  • CPI Report (Sep)
  • Initial Jobless Claims (Oct. 6)
  • China Trade Balance (Sep)
  • China Imports/Exports Data (Sep)

Friday

  • Import Price Index (MoM, Sep)
  • Export Price Index (MoM, Sep)
  • Eurozone Industrial Production (Aug)


IMPORTANT DISCLOSURES

The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of the predecessor index, the S&P 90.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solitication of their products or services. LPL Financial doesn’t provide research on individual equities.

All performance referenced is historical and is no guarantee of future results.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Index data obtained via FactSet

Member FINRA/SIPC

For Public Use – Tracking #1-780288 (Exp. 10/19)