On Air with Altair: 3Q 2019 Market Review Video
Want to hear Altair’s analysis of the markets, but do not have the time to read all of Altair Insight? Watch our video summary of the report and you will be caught up on our market review in 3 minutes.
TRADE DEAL PROSPECTS
The Phase 1 agreement announced by the U.S. in the trade conflict with China has inspired many questions and much skepticism – justifiably so. More negotiations are required and threatened tariff increases still loom. Yet this truce is the best evidence since May that a meaningful agreement is in the works. Full resolution of the trade war’s most contentious issues may be unlikely. However, a series of partial deals would be a welcome development as any agreement would help shore up business confidence and inspire more capital spending.
CONSUMERS CARRYING THE LOAD
Our commentary also discusses how American consumers are doing the heavy lifting for both the U.S. and global economies. U.S. consumer spending is larger than China’s entire economy and still rising at a modest rate. Thanks largely to consumers, the economy continues to move forward despite the negative impact of the trade war. The recent declines in U.S. business confidence and manufacturing are cautionary signs. But the consumer sector, employment and housing all are strong. We think a recession of either the U.S. or global economy in the next 12 months is unlikely.
EASIER MONETARY POLICY
Another discussion point in our commentary is the important steps taken by global central banks to sustain economic growth. The Federal Reserve has set the tone with two interest-rate cuts in the third quarter and an expansion of its balance sheet beginning in October. More than half of global central banks have cut rates in the past six months as they do what’s needed to shore up economies hurt by the trade war. We believe the Fed is unlikely to stop easing with inflation low and the trade war continuing to negatively affect the economy. A third rate cut by year-end, which markets expect, would be good news for the economy and financial markets.
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