Free falling  Consumer confidence fell sharply in September to a three-month low driven by the risks posed to the manufacturing and farming sectors because of trade tensions with China. Confidence fell in regards to the current situation as well as projections for the future. Consumer expectations for six months in the future actually dropped to their lowest level since the beginning of the year. One of the more worrisome findings from this month was that the confidence in the labor market also fell – consumers don’t believe jobs are as plentiful today as they were even just a month ago. Moral of the story: There’s only so much the Fed…

The last cut is the deepest  As expected, the Fed cut its benchmark interest rate by another 0.25% during its meeting this week. Contrary to expectations, however, Fed Chair Jerome Powell pointed to the strength of the economy and suggested expanding its balance sheet (they had been doing the opposite). This decision wasn’t unanimous as two board members wanted to keep rates unchanged while another board member, who believes manufacturing to be in recession already, wanted to cut rates more aggressively by 0.50%.  Moral of the story: The biggest question for the market heading into this decision was the Fed’s willingness on further economic stimulus in the form of rate cuts during…

Houston, we have a debate The third Democratic presidential debate in Houston this week was the first time Joe Biden and Elizabeth Warren shared a debate stage. Expectations for drama were obviously quite high. Topics of “discussion” included universal pre-K, universal health care, taxes, minimum wages, and climate change. Variations on a theme included the need to remove Trump from the White House and the love of Obama.  Moral of the story: The Democratic Party still has a long way to go before any one candidate emerges as a clear winner but a few agenda items seem to be universal across the board. Trump’s policies benefit energy, infrastructure, and defense…

Timber!  It finally happened guys, the ISM manufacturing index fell below 50, indicating a contractionary environment. Economists were expecting the index to remain in slightly expansionary territory, but the 49.1 reading in August is the lowest since January 2016. We saw a marked decline in both new orders and production this month as only half the industries reported any growth in August and only 17% of industries reported growth in new orders.  Moral of the story: This index has been dangerously approaching contractionary territory for months and this report is indicative of a notable decrease in business confidence during the month of August. This index has fallen 10 points since…

Better than expected  Second quarter GDP was revised slightly downward to 2% driven by weaker exports and corporate investments. This 2% number is significantly lower than the 3.1% growth rate we saw in the first quarter (remember much of the growth last quarter was driven by factors more short-term in nature like inventories and trade). The revision for the second quarter indicated stronger consumer spending, which grew at the strongest pace since 2014. Business investment, conversely, was weaker driven by uncertainty caused by geopolitical risks. Moral of the story: The second quarter proved that consumers continue to be the engine of economic growth while businesses are standing at the sidelines waiting to see what…