Markets and Economic Update for July 2019

David Lundgren, CFA, July 11, 2019

Welcome to the Markets and Economic Update, provided by the Hancock Whitney Asset Management team as an informational resource for clients and individuals who are interested in hearing our perspectives on current economic issues.

 

   Markets and Economic Update

 

We lead off with a discussion about how second quarter growth appears to be weaker for manufacturing and business investment in the U.S. and globally, as tariffs and uncertainty around trade are disrupting supply chains and costs. However, the U.S. consumer remains healthy and spending and income data has improved in the 2nd quarter providing some support for economic growth in the U.S. 

The recent trade truce makes the status quo for trade a little more tolerable, says Richard Chauvin, as negotiations restart between the United States and China. Since no deadlines were set, there appears to be a lack of urgency following a meeting between President Trump and President Xi. This indicates there has not yet been sufficient economic pain to force solutions to the difficult issues. The trade war may continue to present headline risk through the remainder of 2019. 

In contrast, Martin Sirera discusses how equity investors are driving up prices perhaps ignoring the ongoing trade war as the S&P 500 has the best first-half return in 20 years and reaches a record high June. 

“Don’t fight the Fed,” says Jeff Tanguis, as interest rates dropped another 5-10 basis points across the curve in June following a dovish Fed meeting. The markets believe a Fed interest rate cut in late July is inevitable, but there is a chance the Fed could surprise investors. 

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