The Fed Looks Ahead and Says “Wait and See”

Posted in , By David Robinson

As expected, the Fed lowered short term rates another 0.25% this week, lowering the cost of mortgage, personal and auto loans. Going forward, the Fed said it would want to see the data before committing to another rate cut, noting that the US economy continues to grow and hiring remains strong, notwithstanding weak business investment. (CNBC) Immediately following the announcement, the US stock market reaction was muted. While the China trade conflict and impeachment pots simmer, the Fed narrative re-emerges as a key narrative for the markets.

  • US Economy Slowed Only Slightly in 3Q: The US economy grew 1.9% in the 3Q, down slightly from the 2% growth rate in the 2Q. Consumer spending stayed strong, while business investment retreated. The 1.9% growth was somewhat higher than we expected and will be a factor in the Fed’s thinking going forward. (Reuters)
  • You’re Only as Old as You Feel: It turns out that this expression may have real substance. People who say that they “feel younger” than their chronological age typically are healthier and more psychologically resilient than those who say they “feel older”. Moreover, the discrepancy between chronological and felt age increases with age. Those reaching 70, for example, may feel 15% or 20% younger than their chronological age and be right when it comes to health and psychological metrics.  (New York Times)

Please continue reading for more on the following: Soaring US Deficit; Lonely Planet Loves Maine; Defining Comedy Sketches and an Alzheimer’s Drug Touted. The comedy note is a personal favorite (for what it’s worth!) and is guaranteed to help take the mind off the soaring deficit.

  • Soaring US Deficit: The US deficit is rapidly increasing again, hitting nearly $1 trillion in 2019. Inexplicably, few in either political party or in academia seem concerned. Am I stuck in “old think”? For sure, there is a legitimate argument that deficits do not matter (or are even a plus) if they promote economic growth. By analogy, it may make sense for a business to incur debt, if the debt fuels business growth enough to pay for the debt and ideally more. But what happens in the future if revenues go down and/or borrowing costs go up? (Washington Post)
  • Lonely Planet Loves Maine! The 2020 Lonely Planet “Best in Travel” Guide ranks Maine fourth among top global travel destinations for next year, the only US destination in the top ten. Part of the attraction will be the state’s celebration of 200 years of statehood. (Portland Press Herald)
  • Defining Comedy Sketches: I absolutely loved this comedy review, which selected the 20 defining comedy sketches of the past 20 years and includes links to watch. Be forewarned that not everyone is going to enjoy all the sketches, given that humor can be very personal. Nevertheless, I hope that many of you get a big chuckle or two from some of these classic routines. (Washington Post)
  • Alzheimer’s Drug Touted: Biogen, a Massachusetts biotech company, disappointed many when it announced earlier this year that a trial of a promising Alzheimer’s drug had been unsuccessful. But in a dramatic reversal, it announced last week that a newer analysis of a larger dataset showed that the drug may indeed prove effective and that it would submit the drug for FDA approval. The sudden about face screams out for caution, we think, but it is still heartening.  (Boston Globe)
  • Quote I Like: “Success is a few simple disciplines, practiced every day…” Jim Rohn

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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.
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