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Market Comment from Pacific Wealth Management (Oct)

Investing Insights

Summary

  • Ongoing uncertainty over trade negotiations, amid the global economic slowdown, are beginning to weigh on both business and consumer sentiment
  • Though imminent recession in the U. S. still appears unlikely, prospects for robust growth are muted
  • Our investment portfolios remain prudently defensive in the face of geopolitical uncertainty in the latter stage of this economic cycle

Market Volatility

After a robust first half of 2019, stock markets have been in a state of flux over the last few months and are becoming increasingly concerned about the slowing global and U.S. economies.

Europe, Japan, China and now the United States are actively adopting both monetary and fiscal policies to help extend the economic expansion.  As expected, our U. S. Federal Reserve Bank cut interest rates for the second time in September. Wall Street has been welcoming these lower rates and expecting more interest rate reductions in the months ahead. The ongoing uncertainty over trade negotiations are beginning to weigh on both business and consumer sentiment.

An imminent recession in the U. S. still appears unlikely, but concurrently, we do not see signs of robust growth in our immediate future, until there’s more clarity on the trade negotiation front. Fortunately, the American economy is holding up, despite the broad global slowdown. Late last week, reports confirmed U.S. unemployment has now dropped to 3.5%, the lowest rate we have seen since late 1969.

Geopolitical uncertainty around the world is certainly elevated and likely to persist through the 2020 Presidential Election.  We expect the ebb and flow of election expectations to be one of the primary drivers of both trade negotiations and the financial markets in the near term.  Our investment portfolios remain prudently defensive in these later stages of the economic cycle. 


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