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Market Commentary

July 2019 Monthly Market Commentary

Time to Celebrate?


The U.S. economy is celebrating an important milestone this month, having entered the longest expansion in its history. According to the National Bureau of Economic Research - the official arbiter that identifies the beginning and end of business cycles-the Great Recession ended in June 2009, making this July the 121st month of growth, surpassing the previous longest stretch of 120 months during the 1991 to 2000 expansion. To be sure, we won’t know with certainty if the economy is still in its growth phase for a while. The NBER takes its sweet time gathering all the information needed to identify cyclical turning points.

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Weekly Market Commentary

September 16, 2019


With the ECB ramping up monetary stimulus to jump-start the ailing European economy, the Trump administration is putting more pressure on the Federal Reserve to follow suit. No doubt, the Fed will cut interest rates at its upcoming policy meeting next week, but the expected quarter-point reduction to a range of 1.75-2.00 percent is far less than what the president would like to see. As expressed in recent tweets, his preference is for the Fed to slash the federal funds rate to zero or even less and to resurrect the bond purchase program it abandoned five years ago. That would match the efforts being pursued by the ECB, which pushed its policy rate further into negative territory this week and announced a new round of bond purchases totaling $22 billion a month.

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Weekly Market Commentary

September 9, 2019


Traders and investors returned from their extended Labor Day vacations and, to their dismay, found the economic, financial, policy and geopolitical landscape just as confusing – if not more so – than it was before they left. Not surprisingly, their first week back was anything but tranquil; stock prices see-sawed violently, bond yields fell then rose, the two-year/10-year yield curve inverted then reverted and commodity prices sank even as the dollar and gold prices surged. This dizzying ride echoed the crosscurrents that dominated the headlines during the week.

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Weekly Market Commentary

August 26, 2019


With little new data to mull over this week, the financial markets had a field day trying to make sense of an assortment of statements from policy makers. Not surprisingly, the interpretations ranged all over the field and, as expected, the conflicting messages left investors scratching their collective heads. Stock prices experienced another bumpy ride, rallying early in the week but plunging on Friday, leaving the major indexes further below their levels at the start of the month. Likewise, bond investors are still probing for direction, with yields hovering tightly around their lowest levels since 2016. Importantly, the financial indicator that has received much attention in recent weeks – the 2yr/10 yr yield curve – once again briefly inverted on Thursday before ending the week essentially flat.

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Weekly Market Commentary

August 19, 2019


The recession-watch crowd gained some new recruits this week, lured by a brief inversion of the 10-year/2-year yield spread and a further deterioration in the global economy. While the inversion – a time-honored recession indicator – didn't stick, it remains to be seen if the ominous signal it sent is fully extinguished in coming days and weeks. The global backdrop still weighs heavily on investors' minds, as the German economy contracted in the second quarter, China's slowdown continues apace, geopolitical tensions are escalating, and Brexit uncertainty is intensifying as the October deadline is rapidly approaching. Meanwhile, the U.S./China trade war remains heated despite President Trump's decision to delay about half of the newly-announced tariffs on $300 billion of Chinese imports from September 1 until December 15.

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Weekly Market Commentary

August 5, 2019


The Federal Reserve swung its heavy gavel this week and, to paraphrase an infamous trial, essentially proclaimed, “If the facts don’t fit, you can’t commit.” To be sure, the central bank didn’t completely exonerate the miscreant, as it took out some insurance that the economic defendant’s behavior would not go astray. Hence, it acceded to the jury’s request for a quarter-point rate cut, but refused to commit to a longer sentence of rate reductions, which most members of the financial jury had been clamoring for. From the lens of the chief judge Powell, the facts do not support such a commitment yet; but he did leave the door open should the facts change.

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