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STA Weekly Report – Will investor resilience overcome macroeconomic headwinds?

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INSIDE THIS EDITION:
Will investor resilience overcome macroeconomic headwinds?
Weekly Snapshot of Global Asset Class Performance
Protecting Your Loved Ones with Life Insurance
401k Plan Manager

Trade issues continue dragging down the global economy. Not only has the volume of trade between the U.S. and China plunged, but export-driven economies in Asia and Europe have started to suffer as well, highlighting the highly integrated global supply chain.  

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Source: Bloomberg

Manufacturers are feeling the most pain due to their reliance on global trade and supply chain. The manufacturing sectors in all major economies, including the U.S., Europe, China, and Japan have now all entered into a contraction, with Manufacturing PMI’s in those economies below 50.

The indirect impact of tariffs is also showing through. CEO confidence has plunged amid growing trade worries and slowdown fears. A lack of clear outcomes in trade negotiations has significantly increased uncertainty, which may delay business hiring and investment, thus preventing the full potential of the economy from being realized.

Source: Bloomberg

As such, investors are hoping the Fed delivers the number of interest rate cuts needed to cushion the slowdown of the global economy. Currently, the market’s expectation of additional rate cuts through December has increased from one cut to nearly two cuts, as investors weigh weaker-than-expected US manufacturing PMI in early October. 

Service sector PMI’s have been trending lower in 2019, notably in the U.S. and Eurozone, suggesting they are not immune to weakness in manufacturing sectors and global trade. With readings in major economies staying above 50, service sectors have managed to remain in the expansionary territory due to their domestic nature.

Some good news is that U.S. consumers remain a bright spot in a slowing economy. An unemployment rate of 3.5% and continuous job and wage growth have maintained consumer confidence at higher levels. That said, they have slipped some from peak confidence levels from the last 12 months. This is a testament to the fact that consumer spending, which accounts for two-thirds of U.S. GDP, has not been deterred by economic headwinds.

Another silver lining has been the housing sector, which has recovered as lower interest rates have given the housing market a boost.

This leaves the question for investors – will resiliency in some areas of the economy, namely service and consumer sectors, be able to overcome macroeconomic headwinds and weakness in manufacturing sectors? In our view, the answer will largely depend on the duration of the trade war and the interplay between monetary- and fiscal- policy. The next 6 to 12 months are likely to be crucial for the global economy and provide more clues about whether the global economy will slide into recession or simply take a pause.

Weekly Global Asset Class Performance

Protecting Your Loved Ones with Life Insurance
By Scott A. Bishop, MBA, CPA/PFS, CFP

How much life insurance do you need?
Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you’re young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows your need for life insurance increases.
Here are some questions that can help you start thinking about the amount of life insurance you need.

Click here to read full article




Important Disclosure:
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by STA Wealth Management, LLC), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from STA Wealth Management, LLC. Please remember to contact STA Wealth Management, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. STA Wealth Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the STA Wealth Management, LLC’s current written disclosure statement discussing our advisory services and fees continues to remain available upon request.



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