Hello! I’m back with my economic update for August 2019.
The market advanced in July on encouraging earnings news and on anticipation that the Federal Reserve would cut interest rates. That anticipation grew after Fed Chairman Jerome Powell’s mid-month testimony on Capitol Hill. The S&P 500 gained 1.3 percent in July and passed 3,000 for the first time.[i],[ii]The Dow Jones Industrial Average rose 1 percent; the Nasdaq Composite increased by 2.1 percent.[iii]
The Fed made a quarter-point cut on July 31st. Chairman Powell did not suggest that additional cuts were coming. Addressing the media, he called the move a “mid-cycle adjustment to policy.”[iv]
Some analysts think the Fed cut is a precaution. Its latest policy statement cited “global developments” and “muted inflation” as factors, and those are concerns.[v]Yearly inflation is still under the Fed’s 2-percent target.[vi]At last look, China’s economy was growing at its slowest rate in 27 years.[vii]
Trade talks also resumed between the U.S. and China. On July 30, trade delegates met, face to face, in Beijing for the first time in months. The market certainly wants a quick resolution to the trade dispute, but the reality may be different. In late July, Treasury Secretary Steven Mnuchin commented that it could take “a few more meetings” to see any progress.[viii]
This month, the Fed and U.S.-China trade relations will likely remain “top of mind” on Wall Street. Note that the Fed’s annual Jackson Hole symposium starts August 22. This event attracts central bank officials from around the world, and the Street pays close attention to what they say. There will also be plenty of earnings calls as the Q2 earnings season rolls on.[ix]
As I record this video, the global drop in stock market values on August 5thhas already happened. There is certainly a lot of doom and gloom and financial media reporters running around with their hair on fire. I have no idea what is going to happen over the rest of August as recent events develop and evolve. So… once again, stick to your plan.
Well, that’s it for this month’s economic update. See you next month!
Thanks for watching!
Please visit my website at:
Remember, the topics discussed in this video are for informational purposes only and that past results do not guarantee future performance. If you would like to discuss your financial situation, please email me at Derek.Merkler@Parsonex.com.
Advisory services offered through Parsonex Advisory Services, Inc., 8310 S.Valley Hwy, Suite 110, Englewood, CO 80112. 303-662-8700.