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State of the Economy 2019

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We at Marathon Financial Advisors think that community involvement and education is of the utmost of importance. It’s for this reason that we seek out experts in areas of financial consulting and wealth management for free educational seminars available to the public. Our upcoming speaker, Dr. Quincy Krosby, is an international voice in the world of economics and market strategy, and she’ll be sharing about the current state of the economy. The following is an excerpt of an article written by Dr. Krosby and contains information she’ll be sharing with us at the free seminar on November 5th at Drumlins Country Club located in Syracuse, NY.

 

As the second half of 2019 begins, the close of the first half looks diametrically different than the conclusion of 2018, which saw a market enveloped by gloom and a Federal Reserve seemingly intent on injecting even more despair this year. And then at the start of the year came a “patient” Fed, and with it a market that climbed faster and higher. Mounting concerns over trade relations and all things “tariff,” with an ever-growing list of countries including China, Mexico, Japan, India and the European Union, began to take a toll on corporate spending, manufacturing data, and worries that the labor market, while still strong, was slowing. Add escalating geopolitical risk focused on the Middle East and momentum in the equity market slowed. Still, Federal Reserve Chairman Jerome Powell again assured markets that the Fed will “act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”

 

Chairman Powell’s comments, coupled with similar remarks from several Fed officials, as well as a host of global central bank representatives, have helped sustain markets and fueled hopes that interest rate cuts are forthcoming this summer. Indeed, at any point where it looked as though the Fed may not be as generous with rate cuts, the markets—and President Trump—have reacted none too kindly. Mr. Trump, who wants lower rates across the board and a weaker U.S. dollar to underpin the economy and markets, recently said, undoubtedly facetiously, that he’d rather have outgoing European Central Bank president Mario Draghi “instead of our Fed person,” and maintained that he has the right to demote or fire Mr. Powell. “He has to lower interest rates to help us compete with China,” he said in a recent interview.

 

Despite the charged atmospherics between the president and the Fed chair, the Fed’s dovish comments have helped the markets. At the end of the second quarter, the Fed funds futures are pricing in a 100% chance of a quarter-point interest rate reduction at the July 31 Federal Open Market Committee (FOMC) meeting, and Chairman Powell has yet to walk back market projections. However, when asked at the FOMC press conference in June whether there would be a 25 or 50 basis points move in rates, Powell remarked that it will “depend very heavily on incoming data and the evolving risk picture as we move forward.”

 

This has been the best first half of the year for the S&P 500 since 1997, with the S&P capturing a new high. Much of the gains can be attributed to global central bank comments designed to calm markets by suggesting that monetary help is on its way if need be. And as the calendar turns the page to the third quarter, futures markets are signaling a roaring celebration.

 

Read the rest of the article here: http://news.prudential.com/quincy-krosbys-q3-2019-commentary-fed-to-rescue.htm


Please join us for this free seminar featuring Dr. Quincy Crosby on Tuesday, November 5th at 7pm at Drumlins Country Club, Syracuse.