Perspectives

The Bond Market, a number of market analysts and President Trump were all ahead of the Federal Reserve once again, in calling for possible rate cuts in 2019, even though there were no signs of recession yet. For several months last year there were calls that the Federal Reserve was tightening too quickly by raising rates and reducing their balance sheet at the same time (policy that had never been done before). The bond market signaled that the Fed was more than a little aggressive in tightening… View More

On Thursday, President Trump announced plans to impose tariffs on all imports from Mexico in an effort to stop migrants crossing into the U.S.  The tariff, effective June 10th, would begin at 5% and escalate at 5% intervals to a maximum of 25% in October.  The U.S. has never previously used blanket tariffs against another country; the President’s authority to do so is unclear.  The markets’ response was extremely negative; with all of the major indices declining for the week.  The Russe… View More

The reverberations from last week’s breakdown in trade talks between the U.S. and China and the sanctions placed on Huawei continued to roil the markets.  In particular, investors focused on the impact on Technology companies as the Nasdaq, the worst performing index, fell 2.29%, followed by the Russell 2000® Index (-1.41%), S&P 500® Index (-1.17%) and the Dow Jones Industrial Average (-0.69%).   Apple, which relies heavily on China for manufacturing and sales, fell 5.31% this week as… View More

We want to share an article that we came across while following news on the U.S. trade dispute with China.  It is a little outside our normal discussion of markets and economics, but we think it gives important insight into what is going on between the U.S. and China, as well as other major world powers.  We have added some highlighting to bring attention to certain details in the article.   Some may be inclined to believe the issues with Huawei are politically motivated, and some of the ar… View More

Trade dominated market sentiment as investors reacted to the breakdown in U.S./China trade negotiations and the potential economic impact. Trading volumes suggest that many investors chose to sit on the sidelines amidst the uncertainty.  Last Monday, the Dow Jones Industrial Average fell 617 points (-2.38%) then reversed course leading all indices at the end of the week with a decline of 0.69%, followed by the S&P 500® (-0.76%), Nasdaq (-1.27%) and Russell 2000® (2.37%).  President Trum… View More

On Sunday April 5th, President Trump tweeted that trade negotiations with China were moving too slowly; he announced a tariff increase (from 10% to 25%) on $200 billion of Chinese imports effective Friday April 10th and announced his intention to initiate a 25% tariff on an additional $320 billion of imports from China.  China, while offering no details, indicated its intention to reciprocate.  The sudden change in outlook for a trade agreement sent the markets tumbling last week: the Nasdaq … View More

The moves made by China last week should not be a surprise... Last Friday President Trump seemed to come out of nowhere with one of his famous Tweets saying he would impose the pending tariffs on China starting at 12:01am Friday May 10.  This caused markets to react negatively as it seemed President Trump was going rogue. Markets opened down on Monday almost 400 points and then rebounded by the end of the day recovering most of its loss.  Yesterday we were not so lucky and the market sold off… View More

The persistently low rate of inflation is feeding a debate on the Federal Reserve’s monetary policy.  The latest inflation reading (specifically, the PCE Core rate) fell to an annual rate of only 1.6% despite overall strength in the economy.  White House officials and some economists argue that the Fed should support continued economic expansion by lowering interest rates; indeed, in the lead up to the Fed’s meeting on Wednesday, many investors anticipated a rate cut.  However, in announc… View More

Less than two months ago, conventional wisdom thought the US economy was in real trouble. The consensus expected real GDP would barely grow, if at all, in the first quarter of 2019. Many were in a tizzy about the "second derivative," of growth, obsessing that near zero growth in Q1 would mean three straight quarters of deceleration in real GDP, which if extrapolated meant a recession could be lurking. Oops! The US economy accelerated in the first quarter, with real GDP up at a 3.2% annual rate … View More

U.S. stocks were mixed last week, with the S&P 500 Index largely unchanged. Behind the headline numbers, however, there was some movement within and between sectors. Health care stocks sold off sharply last week, with managed care stocks hit particularly hard by regulatory concerns. The CEO of United Healthcare came out strongly against the “Medicare for all” plans being discussed by Democratic presidential candidates, which called the issue into focus. In contrast, both technology and f… View More