Well, 2018’s sec­ond quar­ter earn­ings sea­son is his­to­ry.  It was pret­ty much a repeat of the first quar­ter.  Once again, if you were to read the head­lines, you would be led to believe the end-of-times was near.  Reporter anx­i­ety con­tin­ues to run high and, at times almost hys­ter­i­cal.  The con­tin­u­ing trade spat between the U.S. and Chi­na (and oth­er coun­tries), the threats from North Korea and Iran, the geopo­lit­i­cal risk from a pop­ulist Italy and a messy Brex­it, or any one of sev­er­al Trump tweets all ensured the fear-based media oper­at­ed in full-on mode.  Of course, this in turn has fed mar­ket volatil­i­ty, which has risen con­sid­er­ably in 2018.

While that approach may be good at grab­bing atten­tion, it does lit­tle to con­vey the cur­rent sit­u­a­tion of our glob­al econ­o­my.  The head­lines are all bark, no bite.  The real­i­ty, at least at this ear­ly junc­ture, is that the tar­iffs have yet to have any impact on the U.S. econ­o­my.  Small busi­ness sen­ti­ment con­tin­ues to run high and, pro­duc­ers are in growth mode.  And, more impor­tant­ly, broad based con­sumer con­fi­dence con­tin­ues to run high as well.  75% of our GDP is cre­at­ed through con­sumer spend­ing and, make no mis­take, the con­sumer is spend­ing!!  Unem­ploy­ment is at record lows, wages are ris­ing, and the pub­lic feels con­fi­dent in their finan­cial position.

Hav­ing said that and as men­tioned in our 2nd quar­ter eco­nom­ic update blog, there are indi­ca­tions busi­ness­es are tak­ing a wait-and-see approach.  Key lead­ing indi­ca­tors are begin­ning to slow some­what.  While the busi­ness envi­ron­ment con­tin­ues to be pos­i­tive, the polit­i­cal sta­t­ic around glob­al trade is caus­ing them to take a more cau­tious and mea­sured approach to busi­ness invest­ments, which is prudent.

The glob­al econ­o­my also con­tin­ues to per­form well, both in advanced and emerg­ing mar­ket economies.  Growth was sup­port­ed by high­er invest­ment in advanced economies, high­er con­sumer demand in emerg­ing mar­kets and a rebound in glob­al trade (albeit a poten­tial result of coun­tries increas­ing trade ahead of the imple­men­ta­tion of tariffs).

How­ev­er, the poten­tial for an eco­nom­ic slow down is far greater across the globe.  Inter­na­tion­al cen­tral banks will begin tight­en­ing mon­e­tary pol­i­cy, U.S. fis­cal stim­u­lus will end, and China’s eco­nom­ic slow­down may progress.  Despite pos­i­tive near-term eco­nom­ic prospects for the world, debt lev­els, esca­lat­ing fears about trade wars, and geopo­lit­i­cal ten­sions (specif­i­cal­ly pop­ulist pol­i­cy in Italy and Spain) pose a sig­nif­i­cant threat.

On Thurs­day, Novem­ber 1st, we will con­duct our quar­ter­ly Eco­nom­ic Review Webi­nar.  The focus of this webi­nar is to review the over­all sta­tus of the U.S. and glob­al econ­o­my.  Whether you are a busi­ness own­er or indi­vid­ual investor, join us to learn about how things have gone and where we see things heading.