Market Blog
August 30, 2019
August has a reputation as a volatile month, and it sure delivered this year. After nearly two months without a 1% close higher or lower for the S&P 500 Index, market turbulence re-surfaced in August. Over the past month, we’ve not only seen the worst three days of the year, but many 1% swings in both directions.
Daily Insights
More choppy action? After falling for four consecutive weeks, it appears U.S. stocks have a good chance of finishing higher this week with the S&P 500 Index up 2.7% through Thursday’s close. Technically, the S&P 500 continues to trade in a relatively tight range – trapped between its 200-day moving average (2,804) and 50-day moving average (2,924). Continue reading
Economic Blog
August 29, 2019
World trade volumes contracted in June and the second quarter as the United States-China trade conflict impacted the amount of goods crossing borders. On a quarter-over-quarter basis, trade has contracted for three consecutive quarters.
This is not too surprising given the current trade environment. The slowdown in global trade has been significant since President Trump first slapped tariffs on washing machines in February 2018, and followed up with tariffs on Chinese imports in March 2018. As shown in the LPL Chart of the Day, Global Trade Has Slowed Significantly, world trade volumes have tumbled from 5-6% annual growth to a slight decline in just 16 months, even though some trade activity is being shifted to other countries in Southeast Asia.
Daily Insights
Stocks higher after China urges calm. Beijing indicated it would hold off on retaliating against President Trump’s latest tariff hike because it preferred to discuss removing the extra duties. Continue reading
Economic Blog
August 28, 2019
U.S. consumers are feeling especially empowered these days, despite growing pessimism about the economic outlook.
As shown in the LPL Chart of the Day, Consumer Confidence Pushes Through Trade Uncertainty, the Conference Board’s Consumer Confidence Index fell to 135.1 in August. Still, that’s the fifth-highest reading of the economic cycle, an impressive feat given trade tensions and other global headwinds.
Daily Insights
Global stocks decline. U.S. stocks are modestly lower this morning, following global stocks’ cues amid a wave of Brexit headlines and continued anxiety around the U.S.-China trade dispute. The S&P 500 Index is about 5% away from record highs, yet recent volatility has felt especially uncomfortable amid magnified stocks’ swings in both directions. Continue reading
Economic Blog
August 27, 2019
Business investment remains a critical component for this economic expansion.
Capital expenditures (capex) drive productivity gains (more output per hour worked), which enables economic growth while keeping inflation contained. That helps keep the Federal Reserve (Fed) at bay.
Daily Insights
Some carryover from Monday’s rally. Stocks continue to rally after President Trump’s more conciliatory tone on China at the G7 summit, despite conflicting reports on recent conversations with Chinese officials. Although compromise may not come soon as both sides dig in, the fact that more talks are on the calendar is encouraging, while the president’s “job interview” in November 2020 looms large as it may up the pressure to cut a deal. Continue reading
Market Blog
August 26, 2019
When Federal Reserve (Fed) Chair Jerome Powell speaks, markets listen. Friday, August 23, the markets had a new opportunity to gauge the Fed’s direction when Powell gave a closely watched speech at the annual gathering of central bankers in Jackson Hole, WY. This was Powell’s first opportunity to follow up on the release of the minutes from the Fed’s July 30-31 policy meeting, where the Fed cut its main policy rate for the first time since the 2007-2008 financial crisis. The minutes revealed general consensus among the meeting attendees that a cut was necessary, as well as a lively debate about the overall future path of rates.
Daily Insights
Typical estimate cuts in an atypical environment. S&P 500 Index earnings estimates for the next 12 months have fallen by 1.8% during earnings season, in line with historical averages despite significant headwinds of tariffs, slower global growth, a strong dollar, and more. Continue reading