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Market Commentary

March 2019 Monthly Market Commentary

Reduced Policy Risks Defuses Recession Threat


The economy skirted another landmine on February 15 when Congress passed, and President Trump signed, a package of spending bills that funds the government for the rest of the fiscal year ending September 30. With the growth-impediment of another government shutdown out of the way, the economic expansion should remain on course to become the longest in U.S. history. While that milestone, which would be reached in July, is laudable, other records have already been broken. Most notably, the economy has celebrated the longest stretch of continuous job gains ever, reaching 100 consecutive months in January.

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Weekly Market Commentary

March 18, 2019


With the start of spring less than a week away, is it time to start looking for green shoots? For sure, the current quarter is not looking particularly lush. Coming on the heels of a December slump in consumer spending, a drag from a widening trade deficit and another pullback in residential activity, the economy is climbing out of a deep hole that handicaps its growth prospects for the period. The scant data available through February is tracking a GDP growth rate of less than 1 percent, which by any definition is perilously close to a stall speed. Nor did the key jobs report for February released last week provide much uplift, thanks to the tepid payroll increase and decline in hours worked during the month.

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Weekly Market Commentary

March 11, 2019


The headline report of a shockingly weak 20 thousand gain in employment last month took the markets by surprise, as Wall Street had expected a much stronger increase of about 180 thousand. However, when a monthly number is so far off the consensus forecast, it is understandably viewed with suspicion – and this time is no different. While a slowdown in job growth has long been expected the drop‐off from the 311 thousand increase in January, revised up from 304 thousand, was far steeper than indicated by the economy’s underlying fundamentals. What’s more, the headline slowdown in nonfarm payrolls masks some positive developments in the details of the employment report.

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Weekly Market Commentary

March 4, 2019


With a nod to Ol’ Blue Eyes, Frank Sinatra, 2018 was indeed a “very good year.” The final reviews haven’t been written yet, but preliminary notices for the fourth quarter indicate that last year ended on an upbeat note. Depending on how the year’s performance is graded it was either the strongest in three or in thirteen years. Comparing the calendar years, the 2.9 percent growth rate was the best since 2015. Measuring the fourth quarter against the corresponding quarter of 2017, the 3.1 percent gain outperformed every year since 2005. In either case, 2018 stands tall amidst a near-10-year recovery that saw growth averaging a lackluster 2.2 percent annual rate, the most sluggish upturn in the postwar era.

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February 2019 Monthly Market Commentary

It’s Not Just Jobs


Thanks to the government shutdown, it will be a while before the data calendar returns to normal. In the meantime, economists, policymakers and investors are flying partially blind. Yet through anecdotal reports, private surveys and hard data available from government agencies that remain open, including the Labor Department and the Federal Reserve, a sense of how the economy is performing can still be had. There are still missing pieces on last year’s fourth quarter, but all the evidence suggests that the year ended on a firm note, punctuating the strongest full-year of growth since 2005.

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Weekly Market Commentary

February 25, 2019


Aside from the persistent strength in the labor market, virtually every key economic report for December and January has come in weaker than expected. To some this confirms the notion that labor market data, particularly on payrolls, wage growth and unemployment should be viewed as lagging indicators. The sustained strength in the job market reflects earlier strength in the economy that encouraged businesses to hire more workers to generate output. What’s more, given mounting labor shortages following a record 100 consecutive months of payroll increases that has driven the unemployment rate down to 50-year lows, employers are reluctant to lay off workers at the first sign of economic weakness, which may or may not be temporary.

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Weekly Market Commentary

February 19, 2019


Just as we were ruminating about how the economy has entered a sweet spot of low unemployment, solid growth and tame inflation, a nasty revelation made an abrupt appearance that turned the narrative on its head. It appears that the holiday shopping season last year was not so festive after all, as the cash registers at retailers stopped ringing in December. In one of the more shocking reports to hit the headlines this week – belatedly because of the 35-day government shutdown – retail sales tumbled in the final month of the year, staging the biggest decline since September 2009. Consumers, of course, are the economy's main growth driver – accounting for more than two-thirds of total economic activity –so the zipping up of their wallets and purses just prior to the new year is clearly not a trivial event.

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Weekly Market Commentary

February 11, 2019


It will be a while before the data calendar is back to normal, as the government shutdown prevented the Census Bureau – the government’s main statistical-gathering agency – from publishing key data during the 35-month hiatus. That includes the comprehensive GDP report for the fourth quarter, which still doesn’t have an official release date. Nonetheless, the paucity of information hasn’t stopped economists from estimating how the economy performed in the waning months of last year; most of the growth estimates fall within a range of 2.5-3.0 percent. We expect the GDP growth rate to have come in at 2.8 percent, topping out a full year for growth that would rank among the strongest since 2005.

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Weekly Market Commentary

February 4, 2019


There was much joy on Wall Street this week. Stocks rallied sharply, punctuating the strongest month of January for the Dow Jones Industrial average and S&P 500 in at least three decades. As the curtain rises on February, much of the debilitating plunge in stock prices during the fourth quarter had been recovered, with the S&P standing just 9 percent below its September 20 record high and up 14 percent from the trough of late December. Meanwhile, the new year is bringing cheer to fixed income investors as well. Bond prices moved significantly higher this week, lowering the yield on the bellwether 10-year Treasury issue to 2.63 percent on Thursday before an eye-opening jobs report on Friday sent it up to just under 2.70 percent by the end of the week. Still, that’s a far cry from the 3.25 percent touched less than three months ago. The decline will lead to lower mortgage rates, an encouraging omen for potential homebuyers.

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