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A Bird's Eye View Blog

Fireside Charts: We're Shocked! Shocked I Tell You.

By:BCM Investment Team | Date:Jul31, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

They did it! Unsurprisingly, the Fed announced a quarter-point rate cut this afternoon—the first in over a decade—which has already lead to stocks turning negative. Check back in on Friday to see how the decision affects other key economic metrics over the next few days...

 

The Fed isn't alone in its current aversion to high interest rates—all central banks are either cutting or holding steady. Should we expect to see a mass return of QE in the coming months? Perhaps... given the fact that worldwide PCE inflation is still muted. The Dallas Fed Manufacturing Index rebounded slightly in July, but still fell below expectations and remains in contraction. China Manufacturing PMI also remains in contraction, despite a small recovery. Many had hope that these manufacturing reports would help drive negotiations at this week's meetings between the U.S. and China, but the talks concluded with no major announcements. Will we be left waiting until after the 2020 election? Democratic candidates took to the debate stage last night and were certainly critical of Trump's approach to trade—should we expect more of the same on night two?

 

 

1. QE reversal only continues here in the U.S. Of course, we created more QE than any other country, so this makes some sense. The Fed's policy modifies significantly in September.

 

 Source: Goldman Sachs, as of 7/30/19

 

 

2. Inflation, and the growth that it measures, remains stubbornly subdued here and abroad...

 

Source: WSJ Daily Shot, as of 7/31/19

 

 

3. Here is Germany's inflation:

 

Source: WSJ Daily Shot, as of 7/31/19

 

 

4. ...and Australia...

 

Source: WSJ Daily Shot, as of 7/31/19

 

 

5. While showing a slight improvement, the Dallas Fed manufacturing report remains in contraction...

 

Source: WSJ Daily Shot, as of 7/30/19

 

 

6. China's manufacturing sector remains in contraction mode...

 

Source: WSJ Daily Shot, as of 7/31/19

 

 

7. It looks like both sides are digging in. Will we have to wait until after the election for a resolution?

 

Source: Bloomberg News, as of 7/31/19

 

 

8. How will this effect financial planning? For starters... it means fewer children!

 

Source: Statista, as of 7/31/19

 

 

 

The markets aren't the only ones with a lot going on this week—BCM is hiring! We’re looking to welcome a Marketing Manager and an entry-level Administrative Assistant to our team. Do you know someone who is looking to make their mark in the financial world and contribute to the rapid growth of an asset management company, all just steps from Boston? If the answer is yes, click below to forward them the application link!

 

 

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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.