Third quarter summary
The end of the third quarter was ugly. Volatility was the theme and it will continue to be with the slowdown of China, the Fed uncertainty and significant pullback globally.
Fourth quarter expectations
As we enter the fourth quarter the housing sector and consumer confidence continue to be strong. Lower oil prices are also helping consumer spending. Negatives for the fourth quarter include continued Fed uncertainty with the poor Jobs Report and a struggling manufacturing sector. We expect more global weakness and uncertainty in China. We also foresee a negative impact on earnings for multinational firms from a higher dollar.
The negative jobs report
The Job’s Report came in below expectations claiming 142,000 jobs were created last month. The real downside was that economists lowered the previous jobs number expectation last month as well. This will have a negative impact on expectations for the Fed and GDP growth.
Is the US economy weakening?
Most economists have felt that the United States has been the strongest economy in a weak world. Could the negative impact of this Jobs report be a sign that the U.S. is weakening as well? On Friday we saw the market start out down with the Job’s Report but rebound by the end of the day. This shows the disjointed market we’ve been experiencing this last quarter. There are many moving parts that is keeping the US economy in flux.
A potential boost for the US economy
Earlier in the year we discussed the Trans-Pacific Partnership Trade Agreement. The representatives have been meeting in Atlanta for the past six days and it looks like a tentative agreement has been reached. Earlier in the year we told our viewers that this could be very positive for the US economy, markets, and key industries like agriculture. A key sticking point was between the US and Australia concerning the expirations of patents on biological and pharmaceuticals. While complex, it has been solved.
One more political issue
The Trans-Pacific Partnership Trade Agreement is now just one more thing that has to go through Congress for approval. President Obama is behind it but we are not sure how many Republicans are. The political cycle is already dealing with the Highway Bill and the Debt Ceiling. This trade deal is just one more item that could be market impactful and one more thing for investors to watch.
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Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
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