The S&P 500 composite hit an all-time high in late July and is up over 344% from the cycle low point in 2009, but we’ve seen a wedge forming as we progress deeper into the economic cycle. A break-out is coming, but on which side?

Goldman Sachs analysts anticipate that less than 25% of companies going public in 2019 will net any income this year, and are expected to produce the lowest profits since the dot-com era two decades ago—despite raising a record amount of cash from their IPOs. Could a little Y2K-era anxiety be in order as well?

Employment indices are softening in Europe as it ventures deeper into manufacturing contraction, helmed by Germany which saw its manufacturing PMI decline at it’s fastest pace in a decade (re: since the recession era). We’ve already seen the yield curve invert; is this another signal of impending recession?

Warning: the Fed’s recent shopping spree may leave you with sticker shock. They added over $75 billion of assets to their balance sheet last week alone, and plan to continue injecting money into the markets daily through October in an attempt to stabilize rates.

While the Fed’s second consecutive quarter-point rate cut this week disappointed many—including President Trump—who were hoping for more aggressive action, we’re encouraged by a look at how the S&P has historically performed in similar circumstances. An average 12-month return of 16.7% doesn’t sound too shabby!

While we wait on Chairman Powell’s speech this afternoon, let’s take a look at what else is going on:
U.S. Industrial Production rebounded in August to reach a 2019 peak, approximately tripling the expected 0.2% print. Could this be a good sign of impending recovery for U.S. manufacturing?

While futures have declined slightly following the Saudi oil attacks, we saw equities rally last week thanks largely to renewed trade war optimism. Both nations have made concessions in recent weeks, leading to increased expectations that an interim deal could be struck when negotiators meet in October.

While QE just officially came to a close in the U.S. on 7/31, the ECB announced yesterday that—in addition to a rate cut to record lows—it will relaunch its easing program in October and continue it for “as long as necessary.” Will the Fed follow suit when they meet on Wednesday?

While stocks have edged higher off encouraging trade war news this week, as you’ll see in the charts below, Chinese investment in the US has plummeted over 80% since 2016, the Yuan has depreciated so significantly that the exchange rate can only exacerbate costs rather than offset them, and world trade as a whole is contracting at the fastest pace in nearly a decade—i.e. since the great recession.

While Friday’s jobs report was largely disappointing—the retail, trade, and transportation sectors all saw a more significant net decline of ~11,000 workers in August, and private sector employment expanded at the slowest pace since February—focus is primarily centered on central banks this week.