Investment Insights & News

Speaking on Money 09/05/2019

Ron Gambassi
September 5, 2019

Issue: Tariffs on $115 B of consumer products (apparel, footwear, etc) went into effect September 1st.

Implication: Products on Target and Walmart shelves could start rising soon. Target directed its suppliers to eat the cost increase but it’s not clear how long that can last.

Issue: There is now $17 Trillion of negative interest rate government bonds around the world.

Implication: Pressure is mounting for the Federal Reserve to further lower interest rates. The 10-Yr Treasury bond is paying 1.59% interest today. The lowest level in 50 years has been 1.46%.

Issue: Manufacturing in the U.S. has fallen sharply, now at its lowest level since January 2016.

Implication: Business confidence is eroding and so may go business spending (i.e. capital expansion, wage increases, etc.)

Issue: Consumer spending in Q2 rose 4.7%, the largest rate in 4 ½ years

Implication: Consumers feel good about today but surveys show they are concerned about the future, and could curtail spending. Consumer spending drives 70% of the U.S. Economy.

Issue: Trade talks with China are back on for October.

Implication:  The stock market is rallying on the news with hope for a trade war resolution.

Issue: The economy added 130,000 jobs in August; 25,000 were temporary census workers. Unemployment rate remains at 3.7%, near a 50-year low.

Implication: The economy is strong though the job number indicates some signs of slowing.

Here’s to a profitable week!


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