03
Oct
US economy is doing well. Beware the adverse effects of tariffs.
Exceptional GDP growth of +4.2% in Q2. Inevitable deceleration in 2019. Risk centred on tariffs. Long-term rate increase. Keep an eye on profits. Caution with regard to the S&P 500.
Key points
- Exceptional GDP growth of +4.2% in Q2
- Eighth rate hike by the Fed, moving towards the 3.1% fed funds target for 2019
- Fed remains confident, not worried about inflation
- Fed raises 2018 GDP growth outlook to +3.1%
- Growth will inevitably decelerate
- Leading indicators are ambiguous, but consumer confidence is sky high
- Trade tensions already affecting US foreign trade?
- Slight pressure expected on long-term rates
- Medium-term outlook on rates: 3-3.5%
- Relative attractiveness of dollar decreases
- Keep an eye on profits and equity valuations
- US market not immune to knock-on effects of tariffs
- Possible PE contractions and price drops
- Trends remain favourable to equities
