Fed Gives Guidance, China and G20, U.S. Economy (and more)

Posted in , , , , , , By David Robinson

With the Fed signaling that it may slow the pace of interest rate increases, the stock market is getting some good news. Concerns like trade conflicts and Brexit remain but knowing that the Fed is flexible when it comes to pushing rates up bolsters the positive case for equities.

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  • Powell Boosts Markets: Fed Chairman Powell indicates that rates are slightly below a "neutral" level. In lay speak, this means that current rates are close to the point that they neither encourage nor discourage economic growth. It signals less tightening in the form of rate hikes for the foreseeable future. We anticipated this “signal” but are still reassured to hear a public statement, given the headwinds facing the stock market. 
  • “China Rules”: The U.S and China are in a struggle for global influence and dominance. The New York Times multi-part series called China Rules is worth the deep dive. We talk about trade disputes with China, but trade is only part of a broad geopolitical conflict.
  • G20 Summit: Keep a close eye on this week’s G20 summit meeting in Argentina. In particular, will planned talks between President Trump and Chinese President Xi Jinping offer hope for a reasonably quick resolution of the trade issues? My sense is that this is going to be a pro-longed multi-faceted conflict without a quick or easy fix. But talking is presumably good.
  • Saudi Arabia Cut-Throat Family Feud: For those unfamiliar with him, David Ignatius is an editor at the Washington Post and is an astute observer of international issues, particularly the Middle East. Read what he has to say about the gruesome Khashoggi murder.
  • U.S. Economy Grows 3.5% in 3Q: The U.S. economy continues to grow. The third quarter pace was down from the 4.2% 2Q growth rate but is still quite healthy. Consumer spending was somewhat lower than anticipated but business investment was higher. Business profits soared to a six-year high. 
  • Fed Forecasts Positive U.S. Growth: Chairman Powell also noted that the Fed and “many other economists” continue to forecast solid growth, inflation around 2% and low unemployment. I recommend the article for a balanced take on the current U.S. economy, both its substantial strengths and the perceived risks to growth.
  • Brexit Is a Mess: Saying that Britain’s decision to withdraw from the European Union is proving difficult to implement is quite the understatement. Hopefully it will ultimately get resolved to everyone’s satisfaction, but the open question is whether it will unduly roil global markets pending resolution. What Happens Next on Brexit
  • Climate Change and the Economy: As we have written before, politicizing the risks of climate change may well turn out to be a terrible miscalculation. This government report details potential economic implications. Trump doesn't buy that climate change is a problem.
  • Medicare Open Enrollment: It’s that time of the year. Here’s a synopsis of planning opportunities during the open enrollment period which ends December 7th. Michael Kitces is a highly respected financial writer.
  • Detective Novels Recommendation: Tana French's Dublin murder squad series is seriously entertaining. I started at the beginning of the series and am currently devouring the third novel. French was born in Vermont but now lives in Dublin. The Washington Post calls her “the most important crime novelist to emerge in the past ten years,” and the New York Times chose The Witch Elm, the latest in the series, as a 2018 notable book.

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About the Author David Robinson

A wealth advisor with more than 25 years of experience in the financial field, Dave serves as Robinson Smith Wealth Advisors’ Co-Chief Investment Officer and is a Co-Managing Member of the firm. As a Certified Financial Planner® and non-practicing attorney, he provides clients with deep expertise in areas including investment management and retirement planning.
Disclaimer and Disclosures: Past performance is no guarantee of future results. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Our opinions are subject to change without notice as market and economic conditions shift.