A Warren presidency would have implications for investors, as she has been critical of capitalism and wealth accumulation in recent stump speeches. Many of the policies in her campaign platform, if enacted, would affect a broad swath of stock market sectors.
The financial markets entered the home stretch of 2019 on shaky ground—uncertainty on the economic front (slowing global growth) and the political front (trade negotiations, impeachment, Brexit) combined to heighten recession fears and fuel volatility in both the stock and bond markets.
A tale of two economies: still solid job gains fueling strong consumer spending, especially for big ticket items, versus the trade war hitting primarily the manufacturing sector. Overall economic growth is slowing but only to around the long-term trend rate of the economy…at least for now. See Nationwide Economics’ take on what's happening and why this month in the economy.
President Trump announced a “phase 1” deal was reached between the U.S. and China. Specifics at this point are limited to delayed tariff implementation and agricultural purchase, with non-specified progress on more structural issues that will require phases 2 and 3. The news was sufficient to break a three-week losing streak for equities, but skepticism is warranted given the whipsaws driven by trade headlines over the past year.
The trend in consumer inflation remains soft even as the ultra-low unemployment rate and improved consumer spending point to tighter labor and product markets. Lower energy costs again held back the consumer price index (CPI) for September. A flat reading for the month kept the 12-month change in the CPI at a low 1.7 percent. Headline inflation readings could continue to swing with energy costs in coming months, especially given the elevated tensions in the Middle East at present.
The IPO market has struggled, as several high-profile “unicorn” offerings have disappointed. Recent issues are trading up 5% from the IPO, lagging the S&P 500 gain of 18%. This is emblematic of the market shift to lower-risk areas, but also a sign that investors are becoming more discerning and demanding for IPOs.
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