Top Three Market Headlines
IMF Cuts Global Growth Outlook: Amid lingering international trade tensions, the International Monetary Fund (IMF) last week cut its forecast for 2019 global economic growth from 3.2% to 3.0%, which would be the slowest pace since the global financial crisis. The updated forecast reflects lower growth estimates for 90% of countries around the world since the IMF’s last forecast in July. Forecasted U.S. growth was cut 0.2% to 2.4%, while the estimate for the Eurozone fell to 1.2%. Keying the lowered forecast is the slowdown in global trade: the IMF expects world trade volumes to grow just 1.1% this year, down from 5.7% as recently as 2017. The IMF continues to forecast that global growth will see an uptick in 2020, though it also cut this estimate from 3.5% to 3.4%.Chinese Data Reflects Slowdown: Data out of China last week reflected the economic challenges the country is facing as a result of its ongoing trade dispute with the United States. First, it was reported that overall Chinese exports declined by 3.2% in September versus the prior year, including a significant decline in shipments to the U.S. of 22%; meanwhile, imports fell 8.5% over the same period. Later in the week, the Chinese government reported that the country’s GDP grew at a 6% rate in the 3rd quarter, the slowest pace since 1992. In an attempt to offset some of these pressures, Chinese authorities have recently enacted stimulus measures in the form of tax cuts and small business lending support.
U.S. Economy Expanded at Modest Pace: In its latest “Beige Book” report released last week, the Federal Reserve stated that the U.S. economy expanded at a “slight to modest pace” from late August through early October. The report, a compilation of economic conditions across the 12 Federal Reserve districts that is published eight times a year, noted that household spending was solid on balance, but that manufacturing activity continued to edge lower due to “persistent trade tensions and slower global growth.” Employers struggled to find workers, leading to moderately higher wages. Additionally, agricultural conditions continued to deteriorate, due to weather factors, weak commodity prices, and trade disruptions. Economic outlooks varied across geographic regions of the U.S., with the Midwest and Great Plains states more downcast than states in the West and South.
Data Points
- The International Monetary Fund lowered its forecast for 2019 global economic growth from 3.2% to 3.0%
- Total Chinese exports fell 3.2% in September from the prior year, with exports to the U.S. down 22%
- The Federal Reserve reported that the U.S. expanded at a “slight to modest pace” from late August through early October
|
As of October 18, 2019 |
Week |
Quarter-To-Date |
Year-To-Date |
One-Year |
|
MSCI All Country World |
0.80% |
0.95% |
17.30% |
8.44% |
|
S&P 500 |
0.55% |
0.41% |
21.05% |
10.07% |
|
Russell 2000 |
1.57% |
0.83% |
15.13% |
-0.17% |
|
MSCI EAFE |
1.24% |
1.68% |
14.70% |
6.83% |
|
MSCI Emerging Markets |
1.27% |
2.40% |
8.43% |
8.23% |
|
FTSE NAREIT |
1.31% |
1.06% |
28.31% |
24.22% |
|
Bloomberg Commodity |
-0.17% |
1.23% |
4.40% |
-6.14% |
|
Barclays Aggregate |
0.10% |
-0.17% |
8.34% |
10.89% |
WSJ 10/14/2019 & 10/16/2019, Federal Reserve 10/16/2019, CNBC 10/13/19 & 10/17/19. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.