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Market Commentary

Weekly Market Commentary

January 21, 2020


History will determine if the phase one deal between the U.S. and China will lead to peace and harmony on the trade front, vanquish investment-dampening business uncertainty, spur faster growth in 2020 and smooth the way towards a successful resolution of the upcoming phase two negotiating chapter sometime after the presidential election. We have our doubts that any of these grandiose ambitions will be accomplished, but acknowledge that the limited pact signed on January 15 will offset some of the damage the trade wars inflicted on the economy in 2019. But even that modest accomplishment is linked to the condition that the deal holds together for the duration of the year; among the terms in the 86-page document is the stipulation that the U.S. can snap back the tariff relief it agreed to if China does not live up to its side of the bargain.

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Weekly Market Commentary

January 13, 2020


Friday’s jobs report provided something for everyone but no compelling reason for anyone to change his or her opinion on the health of the U.S. economy. To the optimists, the report further confirmed that the economy’s main growth engine, consumers, still has plenty of fuel to extend the record-long expansion into the new decade. But the skeptics can also point to evidence that the engine is losing steam and may require a jump-start at some point this year. For the Fed, wherein both points of view have a voice, the report provides a sense of comfort that its current policy is on the right track.

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Weekly Market Commentary

January 6, 2020


The new year got off to a rollicking start, as investors were whipsawed by positive and negative news. Initially, it looked like the stock market was ringing in 2020 on a strong note, building on the stellar gains posted last year. The first trading day of the year saw equity prices surge in response to favorable trade news (an official signing of the Phase One trade deal with China was set for January 15) and reports that China would be unleashing new monetary stimulus to jump start growth in its slowing economy. These developments raised hopes that the two major headwinds from last year – escalating trade tensions and slowing global growth – would abate and clear the way for the U.S. economy to extend its record-long expansion through the twelfth year.

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Weekly Market Commentary

December 23, 2019


In less than two weeks, the economy will be entering a new decade in much better shape than it started the old one. That said, the challenges facing the economy in 2010 were straightforward and the policy prescriptions were clear. The nation was emerging from the deepest recession and harshest financial crisis since the 1930s. Drastic times required drastic measures, and there was a single-minded focus aimed at jump-starting the growth engine and repairing a broken financial system. Although there were disagreements over the extent and type of policies that should be used to accomplish these ends, no one disputed the imperative of rescuing the economy from the existential threat that still loomed large.

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Weekly Market Commentary

December 16, 2019


A frenzy of prospective deals brightened the economic and financial landscape this week, including one that would defuse the long-simmering China/U.S. trade dispute. Importantly, there was a surprising burst of bipartisanship in Congress that would keep the government funded through the fiscal year and finalize a revised NAFTA arrangement.

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Weekly Market Commentary

December 9, 2019


The U.S. economy is in the late stages of a record-long expansion, but it shows no signs of winding down. Indeed, if the latest employment report is any indication, the upturn may be getting a second wind. At the very least, the recession fears so prominent over the summer months have all but vanished. With the economy generating more than 200,000 jobs a month, well above population growth, wages rising comfortably faster than inflation and the unemployment rate at a half-century low, the economy’s growth engine has considerable torque to continue running for the foreseeable future. As well, the skeptics who questioned the Federal Reserve’s decision to put further rate cuts on hold do not have much of a case for their disapproval – at least for now.

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Weekly Market Commentary

December 2, 2019


Economic data released just ahead of the Thanksgiving holiday included all the “right fixings” to support our view that the economy is moving on to a gently slowing path. Adding to the holiday cheer, stock prices continue to set new highs, notwithstanding Friday’s setback, amid growing expectations that a trade deal with China will be accomplished, albeit one that is likely to be greatly scaled down from the grand ambitions originally set out by the administration. Still, any positive movement on the trade front is a key catalyst for optimism in the financial markets, even as it lessens recession fears on Main Street.

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Weekly Market Commentary

November 25, 2019


Since it was a light week for data, the Fed has a brief respite before new evidence that either supports or contradicts its perception that the economy is in a “good place” comes into focus. For sure, early evidence is not very promising. Following a handful of reports for October, the forecasting community has steadily downgraded growth estimates for the fourth quarter. The Atlanta Fed’s GDPNow model is tracking a growth rate of 0.4 percent, down from 1.5 percent at the beginning of the month. We are not as pessimistic, but still see the economy growing at a not-so-hot 1.2 percent pace during the period.

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Weekly Market Commentary

November 18, 2019


As the data calendar for October fills in, we are reminded of that distinguished economic philosopher, Yogi Berra, who famously opined, “When you come to a fork in the road, take it!” Increasingly, the data are portraying a bifurcated economy that can go either way – up or down. We still believe that the path ahead is upward, but the slope is getting flatter and is littered with numerous potholes. That said, the economy’s growth engine is running on more than enough cylinders to power it forward, and its chief navigator, the Federal Reserve, is poised to provide more fuel if needed.

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Weekly Market Commentary

November 12, 2019


The financial markets were again heavily influenced by trade developments this week, this time cheered by reports that American and Chinese negotiators were hammering out a so-called phase one deal that, importantly, would include a rollback of tariffs. Not surprisingly, the news, which became more prominent on Thursday, sent stock prices to new highs as the potential removal of growth-retarding trade barriers has positive implications for the economy and, hence, profits. Also not surprisingly, bond yields moved sharply higher since a potential détente on trade suggests stronger growth, less pressure on the Fed to cut rates and encourages investors to take on riskier assets.

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Weekly Market Commentary

November 4, 2019


The past week was jam-packed with news on the economic, policy and political fronts, which along with ghosts and goblins of Halloween, gave investors the shivers. That said, no skeletons came out of the closet and while the markets were rattled, they remained mostly upbeat, thanks in part to decent earnings reports. On the economy, the third quarter’s GDP report was the first to take center stage followed by the all-important monthly jobs report on Friday. While GDP was a tad stronger than expected, it did little to upend widespread perceptions that the economy is losing steam and will continue to chug along at a gradually slower pace through 2020. On policy, the Fed followed market expectations; it cut its benchmark short-term rate by another quarter of a percentage point, lowering it to a range of 1.50-1.75 percent. But its forward guidance regarding future rate changes created more confusion than clarity. As for politics, the impeachment inquiry into president Trump gained more traction and headlines, but its impact on the financial markets appears to be reaching the point of diminishing returns – at least until an endgame is within sight.

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