Market Update: Thursday, November 8, 2018

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Daily Insights

  • LPL Market Signals Podcast. In our latest episode, listen to LPL Financial Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss why the S&P 500 Index’s tumultuous October doesn’t dampen our optimism for the U.S. economy. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts!

  • NEW video from Chief Investment Strategist John Lynch. Check out the new client-approved video update with John Lynch sharing his thoughts on policy, market, and economic implications of the midterm elections.

  • LPL Research strategists TV appearances. In case you missed it, check out Chief Investment Strategist John Lynch (CNBC) and Senior Market Strategist Ryan Detrick (Fox Business News) talking markets yesterday.

  • EM comeback? Emerging markets (EM) equities have started to show some signs of life, having bounced nicely off of the 10/29 lows (+6.8%, slightly ahead of the S&P 500 Index). Though the election outcome may not materially change the calculus around U.S.-China trade negotiations, on the margin we believe it makes a trade deal more likely, and could smooth out and shorten the path to get there.

  • Global PMIs show clear slowdown in global growth. The U.S. economy continues to set the standard with its Markit Composite Purchasing Managers’ Index (PMI) at 54.9 in October, above the readings for the Eurozone (53.9), Japan (52.5) and China (50.5). After a U.S.-driven bump-up in global gross domestic product in the second and third quarters, the leading element of these PMI indexes and Bloomberg consensus forecasts point to a potential slowdown in global economic growth in the fourth quarter of 2018 and in the first half of 2019. This backdrop continues to point us to U.S. and emerging market equity potential exposure over developed foreign for global allocations.

  • Chinese trade activity still humming. China’s trade surplus widened to $34 billion last month, even after the U.S.’ latest round of tariffs on $200 billion kicked in on September 24. Chinese exports jumped 15.6% in dollar terms, the strongest growth since February. Imports’ 21.4% increase marked the strongest growth in three months, suggesting government efforts to reignite growth in the economy may be starting to work. China’s exports have increased steadily in anticipation of a rate increase on the $250 billion of Chinese imports already subject to levies if a deal isn’t reached by year-end. However, China’s manufacturing activity and industrial profit growth have both slowed significantly, signaling that the expected decline in demand from trade tensions has weighed on production and could start to impact economic data in 2019 should a deal not come to fruition.

  • Fed decision. The Federal Reserve (Fed) is scheduled to wrap up a two-day meeting today with a rate decision at 2 p.m. ET. We, along with the markets, don’t expect the Fed to raise rates today, but we’ll be monitoring the release for any clues on the U.S. economy, the state of inflation, the impact of tariffs, and the future path of monetary policy.

  • Takeaways from a gridlocked Congress. The midterm election is now behind us, and U.S. stocks staged a relief rally yesterday as political uncertainty appears to have faded. But will a rising tide continue to lift all boats? On today’s LPL Research blog, due out at noon eastern, we take a look at what Congress’ split could mean for different asset classes, including specific sectors that stand to win or lose from policy developments.

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Click Here for our detailed Weekly Economic Calendar

Thursday

  • Initial Jobless Claims (Nov. 8); LP: 215K
  • Federal Reserve Rate Decision (November Meeting)
  • European Commission Updates Its Economic Forecasts (N/A)
  • China PPI (Oct)
  • China CPI (Oct)

Friday

  • PPI Report (MoM, Oct)
  • Wholesale Inventories (MoM, Sep)
  • UK GDP Report (Q3)

 

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Index data obtained via FactSet

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