Market Highlights

Economic

• September consumer confidence rose to 125, but was below estimates, as growth slows
• Retail sales fell 0.3% in September and auto sales rose to 17 million units, above estimates
• Non-farm payrolls in September were 136,000, below estimates of 145,000
• Unemployment rose to 3.5%, with underemployment also rising to 6.9%
• U.S. industrial production fell in September, following an increase of 0.4% in August
• Housing prices are up 3.6% on a year-over-year basis, with an decrease in supply to 5.5 months
• New home construction numbers were 1.25 million in September, versus 1.36 million in August
• Existing home sales rose to an annual rate of 5.38 million in September
• U.S. manufacturing expansion is slowing, with September ISM at 47.8, below estimates
• Personal income was up 0.1% and consumer spending was up 0.4% in August
• GDP for Q2 was up 2%, above estimates, and is estimated to be up 2.0% in 2019

Inflation

• September core inflation was 1.7% for CPI and 1.4% for PPI on a year-over-year basis
• Crude oil remains steady at $56.5, with demand off due to a slowing world economy
• Deflation has been the worry for some time, but long term inflation remains concerning

Monetary Policy

• The Fed cut the Fed Funds rate 50 basis points to 2.0%, with the Discount rate at 2.5%
• The Fed has changed its monetary stance heading into the October meeting
• World Central Banks have eased again, and the Fed has joined the easing crowd
• The Fed reversed course in September from its quantitative tightening of a year ago

International

• Prime Minister Boris Johnson and Parliament are pushing to delay Brexit by three months
• Worldwide debt has grown to some $250 trillion, according to the Institute of International Finance
• China’s economic growth slumps as reported GDP up only 5.8%, its lowest in 27 years
• President Trump takes out ISIS leader Abu Bakr al-Baghdadi

Interest Rates

• Ten-year Treasury yields fell from a high of 2.59% to a recent low 1.45%, with global slowdown
• Libor, the inter-bank lending standard, is 1.98%, and is set to be phased out by 2020
• Mortgage rates fell, as the 30-year fixed rate came down from 5% to 3.75%
• Yields of $17 trillion of worldwide debt is negative, Japan 10yr -0.14%, Germany 10yr -0.33%

Earnings

• Reported corporate earnings are beating estimates 79% of the time and revenues are beating 62%
• Third quarter results are up 1% from a year ago, as growth slows
• Markets have reaccelerated with Central Banks becoming accommodative once again

Market Outlook

• S&P 500 rose 20.6% through September on prospects for Fed rate cuts and China trade talks
• Market volatility decreased during the quarter, with the Fed signaling more rate cuts
• Utilities, Real Estate, and Consumer Staples were the best performing groups
• The S&P 500 is trading at 16.8 times forward earnings, above its 25-year average

top of page