September – October 2019

U.S. Economic and Market Highlights

The Economy

  • There’s a balance of opportunities and risks facing investors in the final months of 2019 as unemployment rates remain near 50-year lows and global manufacturing continues to slow.
  • The current trade and tariff dispute between the U.S. and China has caused increased uncertainty related to supply chain management and business expansion.
  • China released third-quarter GDP showing its slowest pace of growth since the early 1990s, while exports and imports with China have fallen more than 10% YTD. At the same time, other countries such as Mexico and Vietnam have benefited from alternative trading relationships.
  • The U.S. markets potentially are less impacted by the slowdown in global trade, as a percentage change to Gross Domestic Product (GDP).
  • In the run up to the American Presidential election, battle lines are emerging between advocates of shareholder primacy versus stakeholder primacy. In August of 2018, The Accountability Capitalism Act called for reform of corporate governance structures.

Fixed Income

  • In October, the Federal Reserve cut its benchmark rate to a range of 1.50% to 1.75%.
  • With muted inflation and decelerating global growth the Fed is likely to keep U.S. rates anchored to rates of other major developed market international economies.
  • Entire German yield curve remains negative as the Eurozone consumer sentiment falls further in September. Short-term interest rates in Japan are also negative.
  • Investors continue to favor U.S. Treasury bonds because of the positive yields, liquidity, and diversification benefits they provide during periods of stock market volatility.
  • However, lower yields may also influence investors to seek higher income elsewhere, such as equity holdings with dividends.


  • Equity markets generally perform well in declining interest rate environments. But volatility is likely to persist as long as progress on the trade talks is uncertain.
  • The equity markets seem not too disrupted by political infighting, including the recent formal impeachment inquiry launched against Donald Trump, by the U.S. House of Representatives.
  • In the third quarter, U.S. equities outperformed Non-U.S. equities for seven of the last eight quarters, as U.S. stock prices remain at, or near, all time highs and whereas Non-U.S. equities remain less expensive at average price valuations.
  • U.S. mid-cap and small-cap stock indexes underperformed with small losses for the quarter, as valuation remain significantly lower than their all-time highs.
  • Value stocks outperformed growth stocks in the quarter, ending their recent dry spell, for only the third time in the last three years.
  • The Non-U.S. stock MSCI EAFE index and MSCI Emerging Markets index fell in the third quarter, in part due to a strong U.S. Dollar compared to other currencies.

[See the Market Tracker below for additional statistics and Global Market Indices.]

This communication was prepared for informational purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security/instrument or to participate in any trading strategy. Past performance is not indicative of future results.