NEW LPL Market Signals Podcast. Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick are back for a second season of the Market Signals Podcast. In this week’s episode, our strategists discuss why 2019 could see a bear market without a recession. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify or wherever you get your podcasts!
U.S. non-manufacturing misses, but still strong. ISM’s non-manufacturing index registered a five-month low of 57.6 for December, missing consensus forecasts for 58.5. Much of the decline in the overall reading can be attributed to a drop in inventories and employment. However, an uptick in new orders, to 62.7, shows that future activity in the sector should remain robust, overall levels of business activity remain firmly in expansionary territory (>50.0), and respondents commented that the business environment is still strong.
Small business optimism elevated but qualified workers scarce. The NFIB Small Business Optimism Index was slightly lower in December but remains near cycle highs at 104.4. The decline from November’s 104.8 reading was driven by falling expectations for both real sales growth and deteriorating business conditions over the next six months. At the same time, reports of higher worker compensation remained near record levels as employers struggle to find qualified workers to help boost inventories. Overall, the data suggest optimism among small business owners is very high but finding the right people to help drive sales growth is getting more and more difficult.
Higher yields in 2019. The environment for fixed income investors has been challenging over the last several years, and recently, the struggle for yield has only intensified. However, we see a disconnect between current rates and this year’s prospects for economic growth and inflation. On the LPL Research blog later today, we’ll weigh in on the current rate environment and outline our fixed income forecasts for 2019.
Monitoring the Week Ahead
- NFIB Small Business Optimism Index (Dec)
- Trade Balance (Nov)
- JOLTS Report (Nov)
- Japan Consumer Confidence Index (Dec)
- Germany Industrial Production (Nov)
- Eurozone Consumer Confidence Index (Dec)
- Eurozone Economic Confidence Index (Dec)
- FOMC Meeting Minutes (Dec)
- Germany Trade Balance (Nov)
- Eurozone Unemployment Rate (Nov)
- China PPI (Dec)
- China CPI (Dec)
- CPI Report (MoM, Dec)
- Monthly Budget Statement (Dec)
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Index data obtained via FactSet
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