Fed — .25 or .50?
Finally!! This Wednesday we will hear whether the Fed will reduce the discount rate by either .25% or .50%. My guess is .25%….. Either way, much will be said AND written. If it’s .25%, the talk will be – when will they reduce further? Which upcoming meeting? If it’s .50%, the talk will be is – the Fed done lowering for now?? Or does the Fed know something negative the rest of us don’t?! Either way, the debate will linger on for the foreseeable future.
What if the Fed surprised everyone and did not lower rates? I don’t think that will happen – however it would certainly provide a bumpy path!
With employment staying strong and GDP of approximately 2.5% for the first half of the year, Corporate Earnings are showing a slight increase! However, many more companies to report with Apple highlighting earnings this week.
China Deal Pushed Off?
My thoughts from the very beginning of the trade issue with China, was that China could wait until our next Presidential Election to decide whether to truly engage in negotiations. Over the weekend, for the first time, I heard President Trump suggest there is a good chance China will wait this out. We are already 1 year into the issue!! If this happens (which is my guess and I hope I’m wrong…….), this issue won’t seriously be dealt with until January 2021.
The tough part is, if you are a company that does all of your manufacturing in the United States, you typically import parts, materials and supplies from China, paying the tariff. This extra cost can either be absorbed by the company, passed on to consumers, or a combination of both. So we are actually penalizing our US manufactures for having factories here. I’m not suggesting this is not a worthy fight; however there will be some blood on the street for some innocent bystanders.
Markets Last Week
Last week saw another rise in the US equity markets, with the Down up .14%, the S&P 1.66%, the Russell 2000 small caps up 2.02%. The Nasdaq Composite led the way increasing 2.26%.
Bonds were relatively flat with the Barclays Bond Index losing a mere (.03%).
Over the pond, both the Developed and Emerging Market equity indexes were down with the Developed Market EAFE down (.20%) and the Emerging Market EM down (.75%)
GDP for the 2nd quarter came in at 2.1% ahead of expectations of 1.8%. High consumer spending offset a decline in business investment. The decline in business investment is the first time since 2016. Perhaps the tariffs have something to do with this….
Question of the Week…
Who is the longest tenured Federal Reserve Chairperson?
1. Ben Bernanke
2. Marriner Ecles
3. Alan Greenspan
4. William Martin
Answer to last week’s question…!
Qualified Charitable Contributions (Donations) have become very popular over the last year because of the limits to obtaining a tax deduction with a typical Charitable contribution. Which of the following are requirements to make a Qualified Charitable Contribution?
- Funds most come directly from your IRA only?
- You must be at least 70 ½ years of age?
- There is a $100,000 per person limit per year?
- There is no annual requirement?
- All of the Above?
The answer is #5 – All of the Above