Summer 2019 Quarterly Newsletter
Author: Kristopher Carroll, CFA®, CFP®
Read Time: 2 minutes
The second quarter of 2019 ended up looking a great deal like the first quarter. Equity markets overall were up, although each quarter did contain one difficult month. Interest rates continued to fall, which led to higher prices in bonds as well. Inflation remained low, employment remained strong and the overall economy appears to be doing well.
The Federal Reserve is now looking to lower interest rates, a reversal from its stance over the past two years. Raising interest rates acts to slow the economy and employment, but it is an effective way to counter inflation. We continue to see low inflation, but the economy and employment picture seem fine. Ongoing tariffs and trade war risks have added some volatility to equity markets and uncertainty about economic growth. Lower interest rates will stimulate the economy and lower rates on long-term bonds indicate that the market expects the Fed to cut rates several times over the next 12 to 18 months. This could potentially extend what has already been a long bull market. Most bear markets historically coincide with interest rates being too high. You might have heard the saying “most bull markets are killed by the Fed.” We continue to watch inflation numbers as we do believe they represent a significant risk. However, we are not predicting high inflation in the short term.
The markets continue to be led by technology, biotech and fast growing companies. International markets have not performed as well as those in the U.S., but prices are higher across the board. We are hearing a lot of concerns about the risk of this market with stock prices at all-time highs. We are not expecting the second half of 2019 to be as strong as the first half, but we do believe that markets could continue to go higher with the Fed lowering rates.
As always, if you have questions about markets, the economy or your portfolio, please reach out to us and in the meantime enjoy the rest of your summer!
This article was featured in our Summer 2019 Quarterly Newsletter available here:
Required Disclosures: The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.Market Update, Market Volatility