Conflicting Signals By: Gabriel PotterMBA, AIFA® 2019.10.28

There are a few odd contradictions between the real economy and the collective best guess for how that economy is, as proxied by the stock market.  For instance, the stock market is essentially at an all-time high, but earnings results have been mixed over the past few weeks.  Investors widely believe (as measured through the futures markets) that the Federal Reserve will provide a third cut to the Federal Funds rate this week, despite the steady growth of the real-world economy.  It’s been a generation since the Federal Reserve cut rates during an economic expansion; let’s hope they have enough dry powder in case there are any actual problems that occur. Few economists or analysts suggest our next recession will be at the same catastrophic level of the 2008 Great Recession, but there are still good reasons to have credible monetary and fiscal responses in reserve.

What could occur?  Well, at a glance, Brexit is still a possibility as yet another deadline was overstepped and extended for the mismanaged United Kingdom.  The global growth story is measurably slowing down, mostly due to a chill over manufacturing and trade.  US business hiring hit a seven-year low and wage-growth is also slowing according to a recent NABE study. 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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