2019 Q3 in Review and Looking Ahead

The third quarter brought mixed results for global capital markets.  Most domestic large cap indices posted modest gains, while domestic small cap and international markets posted losses.  Fixed income returns increased for the quarter as interest rates continued their decline.  The economic backdrop included a US economy that continued to hum along, while global growth slowed.  Central banks around the world tried to spur growth with monetary easing.  However, despite the third quarter’s mixed results, most areas of the broad market (both equity and fixed income) remain positive on the year.

US Economy and Markets

The US economy continued to perform reasonably well in the third quarter.  The consumer continues to be a bright spot with consumer confidence at elevated levels and unemployment still low.  However, some of the momentum may be waning as the pace of growth and hiring seems to be slowing and consumer confidence has retreated a bit.  GDP growth was 2% for the second quarter (annualized) and 2.3% year-over-year.  Inflation continues to remain stubbornly low, as monetary stimulus has not spurred price increases.

Worries over the impact of tariffs and concern about growth overseas led the Federal Reserve (Fed) to cut the Federal Funds rate by 0.25% at its September meeting.  Following the interest rate cut in July, this marks the second rate cut for the year.  Commentary around the rate cut cited it as being a mid-cycle adjustment, but Fed Chair Jerome Powell also recently said that it is his objective to sustain the economic expansion.  Federal Reserve forecasts do not include another rate cut in 2019 or 2020, but market expectations are mixed.

Non-US Economies and Markets

 Throughout the quarter, investors remained focused on below-average economic growth overseas.  GDP growth across the euro zone grew 1.2% in the second quarter (annualized).  Several countries such as Germany, Japan and China revised growth estimates downward.  Similar to the US, central banks around the world responded by cutting interest rates during the quarter.  The European Central Bank also announced a new bond purchase program beginning in November, reinforcing its commitment to spur growth and achieve its inflation target.

The manufacturing sector continues to post disappointing results against the backdrop of trade talks between the US and China.  Both countries threatened and imposed additional tariffs on one another in the third quarter.  The two countries agreed to a 13th round of trade talks in October, somewhat easing concerns going into the end of the quarter.

In the United Kingdom (UK), the seemingly never-ending Brexit uncertainty continues, clouding the outlook in both the UK and the euro zone.  After repeatedly kicking the can down the road, the October 31st deadline for a Brexit deal is rapidly approaching.  The market seems to be pricing in the likelihood of the UK leaving the European Union without a formal deal, but time will tell what the ultimate outcome will be.

What Does This Mean for You?

Against a backdrop of slowing economic growth, returns were subdued during the third quarter, but remain solidly positive on a year-to-date basis.  Global headwinds still exist, such as uncertainty surrounding trade negotiations, an imminent Brexit, and political headlines in the US.  While there appears to be ample fuel for lower expectations going forward, we continue to encourage a long-term perspective and appropriate diversification.  We encourage investors to adhere to a disciplined process that includes an asset allocation closely aligned with your financial goals.  If you have any questions or would like to meet and review your financial situation, please call our office for an appointment.



Important Disclosure Information

Domani Wealth, LLC (“Domani”) is an SEC-registered investment adviser with its principal place of business in Lancaster, Pennsylvania. Domani may only transact business in those states in which it is notice-filed, or qualifies for an exemption or exclusion from notice-filing requirements. This communication is limited to the dissemination of general information pertaining to its advisory services. Accordingly, this communication should not be construed by any consumer and/or prospective client as Domani’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice. Any subsequent, direct communication by Domani with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Domani, please contact the SEC or the state securities regulators for those states in which Domani maintains a notice-filing. 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 Domani, or any non-investment related content, made reference to directly or indirectly in this communication 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 communication serves as the receipt of, or as a substitute for, personalized investment advice from Domani. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Domani 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 Domani’s current written disclosure Brochure discussing our advisory services and fees is available upon request. Please Note: If you are a Domani client, please remember to contact Domani, 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, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Domani shall continue to rely on the accuracy of information that you have provided.




Market performance commentary

Send this to a friend