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In the latest LPL Market Signals podcast, Chief Investment Officer and Director of LPL Research Marc Zabicki and Chief Economist Jeffrey Roach discuss historic moves in the currency markets, aggressive central bank actions, and updates on consumer confidence.

Pound Sterling Hits New Lows

The British pound fell to a near four-decade low relative to the U.S. dollar following the announcement of significant tax cuts. The pound remains above parity with the dollar, but the probability of the two currencies reaching parity has increased as the U.K.’s current account deficit widens due to rising energy costs. The Bank of England (BOE) is projected to continue raising interest rates to slow inflation, which would put fiscal and monetary policies at odds with each other.  

Markets Show Extreme Bearish Sentiment

The American Association of Individual Investors (AAII) bull-bear spread reading is the sixth most negative in survey’s history as the Bank of America’s Bull and Bear indicator is at “max bearish” levels.

Confidence Improves in September

In a word: “Defiance.” Consumer confidence in September defied investor sentiment. The three-month average jumped back up to triple digits. Inflation expectations fell for the third consecutive month. The Federal Reserve (Fed) will be pleased to see well-anchored inflation expectations. Consumers see a plentiful amount of jobs available, and plenty of job openings should induce sidelined workers to re-enter the labor market. Tight labor markets and resilient consumers provide margin for the Fed to continue its aggressive tightening in November.

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Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the U.S. and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.

 


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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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