Insights

CREDIT AND MARKET STRATEGY
MUNICIPAL MARKET WEEKLY

November 4, 2019

Global Markets: Markets Rally on "Goldilocks" Scenario...

+ Global markets rallied on a series of largely positive catalysts with US equity markets mostly hitting record highs...

+ The Fed as expected cut rates -25 bps for the third time in in 2019, economic data for the US and the EU was better than expected, Q3 corporate earnings largely beat estimates, developments in the US-China trade war were positive, and Brexit deadline extension to Jan, 2020 was confirmed by EU. The House passed impeachment procedures on party lines and California wildfires continued to spread...

+ The Fed on Wed attempted to maintain the US economic expansion in the absence of inflation pressures through a third -25 bps “insurance” rate cut (target range 1.50%-1.75%). Chairman Powell removed the phrase “act as appropriate” in guidance, indicating that the Fed would wait to see indications of a downturn before cutting rates further…

Quarterly Review

SAMUEL A. RAMIREZ & COMPANY, INC.
QUARTERLY MACROECONOMIC OUTLOOK
FINANCIAL STRATEGIES GROUP – 4th QUARTER 2019

Dear Clients,

Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:

• The global economy is still growing, but decelerating.  The IMF slashes its global growth forecast to 3%, the Fed expects that US growth would moderate to its potential rate of around 2% minus, and Europe is stuck at 1% plus.

• US-China trade tensions and geopolitical risks seem to be the main drivers affecting sentiment, declines in global trade, business investment and manufacturing output.  Though consumers are still feeling robust, they may eventually feel the pinch.

• Unlike the 2007-2009 contraction, there is not much central banks can do about our current predicament, regardless of how hard they may try.  The answers will have to revolve around fiscal and trade policies.  Nonetheless, the Fed, the ECB and other central banks are on a loosening policy stance, largely as insurance policies.  With global assets bearing negative interest rates exceeding $15 trillion, interest rates are likely to move along a soft path – unless the global economy heats up.

Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.