A Big Week for Markets l LPL Market Signals Podcast

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Fed Cuts Rates

The Fed cut interest rates for the first time since the 2008 financial crisis and announced it would end its asset sales as well. The LPL strategists discuss that the market appeared okay with this strategy, but during his post-meeting press conference, Fed Chairman Powell opened the door to the possibility that this could be a “one-and-done” rate-cut cycle. The bond market, however, is signaling the potential for several additional cuts in 2019. We continue to expect at least one more cut this year to help combat the slowing manufacturing data, low inflation, and worries over the U.S.-China trade dispute.

Tariffs Tweet

President Trump tweeted that 10% tariffs would be added to $300 billion worth of Chinese imports beginning September 1. This announcement was met with a large global sell-off, as trade had taken a back seat to the Fed the past few weeks. The ongoing trade dispute is a growing concern, as companies simply aren’t investing in themselves (capital expenditures) as much as we would like. To extend this record 10-year-old economic cycle, business investment will be needed. LPL strategists continue to expect an eventual path to resolution with China sometime later this year, but it appears both sides are still playing hard ball here.

Consumers Still Solid

Finally, the U.S. economy created 164,000 jobs in July, which was a tad light. Still, this late in the business cycle, we remain very impressed by how solid the labor market is. In fact, the U.S. consumer is one of the true stars for the global economy right now. As the LPL strategists discuss, continued strong consumer confidence, retail sales, and consumer spending continue to drive the U.S. economy. We would like to see business spending and investment pick up, but the consumer continues to lead here.

Chart Summary:

August has been the worst month of the year for the S&P 500 for the past 10 years, with some spectacular drops along the way. Going all the way back to 1950, this month has been one of the weakest historically.

Tune In Now

Listen to the entire podcast to get the LPL strategists’ views and insights on what you can expect in the markets and economy through the end of 2019. You can subscribe to Market Signals  on iTunes, Google Play, or Spotify.

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