Once again, the economic data reports were dominated by shifting trade policy perceptions, but this time things were flipped. It was the Chinese indicating a possible rollback of tariffs on both sides, sending the stock market higher. However, that was refuted by the White House the next day.
The ISM Non-Manufacturing improved in October, consistent with moderate growth in the overall economy in the near term. Unit motor vehicle sales fell in October. Productivity figures were poor (these data are quirky, but the underlying trend is disappointing, especially in manufacturing). The UM Consumer Sentiment Index was little changed. Consumers remain optimistic about the job market, while the impact of the impeachment inquiry is “virtually nonexistent” according to the report.
Next week, Fed Chairman Powell will testify twice on Capitol Hill, although his evaluation of the economic outlook is not expected to deviate much from what he said in his post-FOMC press conference. Moreover, said testimony will be overshadowed as the impeachment inquiry enters a more public phase. The important economic data will arrive on Friday. Retail sales are expected to be mixed and industrial production should further reflect the GM strike. In the Consumer Price Index (Wednesday), a modest increase in gasoline prices will be amplified by the seasonal adjustment (which anticipates lower gasoline prices in October). Core inflation should remain moderate.
All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business November 7, 2019.
© Raymond James
Read more commentaries by Raymond James
