The right question, at this stage, is not if we will have a recession in the US, but when. The right time to prepare for potential difficulties in the economy and financial markets is when conditions are still good – like now.
The current US economic expansion entered its 11th year in July 2019, the longest expansion in history. However, starting in June 2019 the US economy is showing signs of slowing. This can be seen in the chart below, which shows the LEI leveling off over the last few months. Economic indicators around the world continue to point to a slowdown in the global economy as shown in the Organization for Economic Cooperation and Development LEI chart.
It’s not time to sound the alarm – yet. The US remains the “cleanest dirty shirt” with economic growth slowing to around 2% per year.
Specifically, I’m watching job growth, which has slowed over the last 3 months. We get the September jobs report on 10/4. I’m also watching how the trade wars are affecting sentiment. In September, consumer confidence fell sharply, with a near record one-third of consumers surveyed negatively mentioning trade policies. Trade is also affecting business sentiment, with 65% of global CFOs viewing trade policy as a negative for their organizations. But these CFOs also felt the US economy was stable.
On the investment front, I am watching corporate profits, which will start to be reported for the 3rd quarter next week. Perhaps more importantly will be what corporations say about the profit outlook going forward. This will likely have the biggest impact on financial markets in the near-term.
The right question is “when?”. We are preparing as though the “when” is sooner rather than later. We are doing this by staying diversified, tightening up risk controls and staying focused on our long-term plan. Please call if you have any questions or concerns.
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October Calendar of Events (comments and additions for future months are always welcome)
- October is Breast Cancer Awareness and Domestic Violence Awareness month.
October 7th 3rd anniversary of purchasing our office building – we’d love to have you come for a visit – 141 W Main Street Rockaway
October 8th Yom Kippur – G’mar Hatima Tova to our clients, colleagues, family and friends who celebrate
October 14th Columbus Day
October 15th Medicare open enrollment thru 12/7/18 – you can switch from original Medicare to Medicare Advantage, or vice versa. You can also switch from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another, or drop your Medicare Part D coverage altogether. Please call us if you have any questions about your options.
October 28th National Chocolate Day – I’m going for Godiva, how about you?
October 31st Halloween
Sources: CNBC.com, Blackstone, Nottingham Advisors, Charles Schwab
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