Market Update: Friday, November 9, 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!

  • Fed maintains rates, expectations. The Federal Reserve (Fed) announced yesterday that it would keep interest rates unchanged, a decision the markets largely expected. There were no major shifts in policy or economic projections in the announcement release, but it did acknowledge that business investment has slowed recently, a trend we largely attribute to uncertainty from the U.S.-China trade dispute. The Fed’s December meeting will likely be more interesting, as we (and the markets) expect policymakers to hike rates for a fourth time this year. Going forward, Fed chair Jerome Powell will also hold a press conference after every meeting, which will give investors more context to digest following the Fed’s policy decision. In the meantime, expect speeches today from two regional Fed bank presidents, as well as vice chair Randal Quarles to garner attention.

  • China’s new growth initiative poorly received. Government officials took the unprecedented step of requiring that 1/3 of new loans be made to non-state owned firms, a move that some investors interpreted as a desperate attempt to shore up the country’s sagging growth amid the growing impact of U.S.-imposed tariffs, record corporate defaults, and stock market weakness. Currently, such loans account for <25% of banks’ outstanding debt, and a ramp-up in lending to the struggling private sector could only exacerbate the problem. Investors expressed their concerns via a sharp selloff in Chinese banks, which led the Shanghai Composite to post its third straight decline on its way to a 2.9% drop on the week. Though most other global equity indexes are also lower in Friday trading, the weekly decline comes as major indexes in the U.S. are set to end the week up more than 2.5%.

  • Wholesale inflation jumps in October. The Producer Price Index increased 0.6% for October, notably higher than the prior month’s 0.2% increase. Demand for services (+0.7%) underpinned the increase, the largest advance since January 2016. The core reading, which excludes the more-volatile food, energy and trade components, rose a more modest 0.2%. While prices continue to rise, year-over-year readings have moderated after reaching a seven-year high of 3.3% in June.

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Click Here for our detailed Weekly Economic Calendar

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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