Feeling Sentimental  October consumer sentiment was revised half a point lower to 95.5, which is about in line with the average we’ve seen in 2019. Consumers are still optimistic about their own situations but incrementally more worried about the broader economy today than they were a year ago (shocker, I know). However, in quite the turn of events, fewer consumers were worried about the China trade war in October than in September. Moral of the story: The labor market is still providing consumers enough confidence to continue spending as they have to sustain this record-long economic expansion. However, confidence has definitely waned from the tax cut highs last year and…

Global growth  The IMF is turning quite pessimistic and expecting the global economy to grow at just 3% this year, which is 0.2% lower than the previous estimate and the slowest pace since the global financial crisis in 2008. The IMF does expect growth to improve slightly to 3.4% in 2020, driven by improvements in some emerging markets like Turkey, Iran, and Argentina.  Moral of the story: To put this into context, if global growth slows to less than 2.5%, it would be considered a recession. The IMF predicts that if all the tariffs in the China trade war are implemented, it would reduce global growth by 0.8% by 2020. This means…

Minute by minute  We saw the meeting minutes from September’s FOMC meeting when the committee decided to cut interest rates for a second time this year. The minutes indicated the Fed’s heightened downside economic risk and recession probability today compared to a few months ago. The decision to cut rates, for some members, was driven by the possibility that it may “help forestall layoffs.” All the flashing caution signs. Fed Chairman Jerome Powell’s commentary this week acknowledged the slowdown in economic activity and also provided context around the Fed’s “soft” quantitative easing through balance sheet expansion and short-term yield curve control.  Moral of the story: The Fed is clearly weary of the slowing business environment having an…

Not pleased  The ISM manufacturing index fell to 47.8 for the month of September, down from 49.1 in August, and contracted to its lowest level since June 2009 (end of the global financial crisis). The market was expecting a reading just above 50, which would indicate an expansionary environment. Needless to say, this report was not well received and stocks took a major hit. Trump promptly took to Twitter to blame the Fed for this situation (**face palm**). The ISM non-manufacturing index (aka services index) also fell for September to 52.6, which is the weakest growth we’ve seen in three years.  Moral of the story: While manufacturing is becoming a smaller part…