Welcome to The Fragreport. Our blog serves as an insightful resource covering markets, financial topics, culture and current affairs.
Investors' October Fears Not Realized. Historically markets perform worse in September than in month of October. Recent moves to cut rates by the Fed signals a more responsive monetary policy. This year the market avoided a sell-off and a crash only to deliver positive returns across the major market indexes which led to new all-time highs for both the S&P 500 and Nasdaq Composite.
Trade Drama and Media Distractions, the Fed is still key. We continue to draw investors’ attention to the impactful actions of the Federal Reserve on equity markets. Investor sentiment may be low, but we believe economic data, Fed moves, and developments on the trade front offer positive outlook for equity markets.
Recession fears, data indicates otherwise. We continue to believe that the direction of the financial markets largely lies in the hands of global central banks and more specifically the US Federal Reserve. Despite “recession talk” being distributed in the media, we believe economic data continues to make the case for economic expansion.
Dovish Fed Policy Supportive of Continued Economic Growth. The June Fed FOMC meeting signaled dovishness reinforcing investors’ expectations of a rate cut announcement at the next FOMC meeting: July 30-31. The yield curve has now inverted all the way from the short dated three-month T-Bills and is becoming a legitimate concern for markets. Economic activity has slowed, especially abroad, but domestic growth continues, and a Fed rate cut should maintain the economic expansion in our view.
What is really driving the market: Trade Wars or the Fed? In our opinion, the market decline in May is a result of the Fed’s failure to recognize economic downside risks. The US economy remains the most dynamic in the world due to strong trade position and American corporations’ adaptability to changing market conditions. The next Fed FOMC meeting will be on Wednesday, June 19th.
US-China Trade Negotiations Fallout. The fallout from US-China trade negotiations is still in focus for markets in the short term. Despite trade drama, interest rate decisions by the Fed even more critical in our view.
