The all-important monthly Jobs report and ISM readings came out this week, and the economic outlook is clear as mud – thick mud.  Isn’t that the way it is supposed to be during a near recession environment?  There is no question the rise in rates last year and global trade conflicts have caused a recession in the manufacturing sector, but the drop in market rates continues to stimulate domestic consumption.  Housing and Auto sales have held in there and even picked up since the drop in rates, which reinforces our view that people are looking for what has already been found – a dramatic economic slowdown that borders on recession.  We know that and the drop to 1.5% in the U.S. 10-year Treasury Bond yield confirms the data we are getting.

 

Bottom line – the drop in economic activity STARTED with the lagged effect of the higher rate environment in 2018 accelerated by the trade conflicts.  We expect the opposite heading into 2020.  Again, our story hasn’t been about great growth, but is instead about stabilizing growth now and accelerating growth into 2020.  We will update if Fed Chair Powell says anything interesting in his 12:30 pm EST presentation, and if not have a great weekend because it has been an exhausting week for investors.

Past performance is not a guarantee of future results. All data points are sourced from Bloomberg as of 10/04/19 unless noted otherwise.




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