Comments last week by Fed Chair Powell suggested that the central bank may become more flexible in how it handles the path to interest rate normalization. The markets responded appropriately. There are plenty of data points about the economy that matter, but none more than the actions of our nation’s central bankers. With growth slowing in the world’s two largest economies and inflation seemingly in check, slowing the persistent march of higher short-term rates garnered plenty of support over the weekend. The drop in December’s ISM and the Consumer Confidence Index made investors nervous, but consumer confidence fell from an eighteen-year high.
According to Steve Slifer of Numbernomics:
“If you annualize the PMI for December it corresponds to a 3.4% increase in GDP growth.”
Growth is slowing, but a recession is not on the horizon. A trade deal with China would improve both growth prospects and confidence. Employment remains positive and wages are improving but aren’t proving to be inflationary. Market volatility will continue as markets adjust to a higher discounting mechanism. The cost of money is important. It affects all parts of our national output. Normalizing the price has and will cause disruptions, but normalization helps keep inefficiencies and excesses from becoming bigger problems like those a decade ago.
SCI HIGHLIGHTS
Ocean Park’s Market Minute
OPAM CIO Terri Spath welcomes you to 2019!
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