Investment Commentary

Miles Capital, Investment Advisor

October 28, 2019

The Consumer Engine is Running Well Through Bumpy Roads     

The markets are entering the fourth quarter with continued uncertainties relating to global economic growth and trade.


  • The economy is still on sound footing, although slightly weaker than recent quarters. Labor markets have held up, inflation is low and the outlook is for continued but moderate growth.

    • GDP growth for the second quarter was a 2.1% increase versus 3.1% for the first quarter. However, the first quarter had a technical impact from increased inventories due to trade uncertainties.

    • Corporate earnings growth is still relatively strong primarily due to robust U.S. consumer spending due to low unemployment and rising household incomes.


  • The volatility of trade remains and is tweet dependent. There was positive momentum recently of achieving a “Phase One” trade agreement.


  • Global growth has decreased, but the European Central Bank and the U.S. Federal Reserve (Fed) interest rate policies are accommodative.


  • We have seen the Fed pivot twice this year from raising interest rates to taking a “patient pause” to lowering rates twice during the third quarter.  At Miles Capital we believe that the Fed will lower rates again this quarter, but we believe further interest rate changes will be data dependent.


  • Our interest rates remain low here in the U.S. partially due to the Fed activity, but also due to approximately $15 trillion of negative yielding global debt. Negative global yields push more money into U.S. Treasuries and pressure our rates. This also means that the recent inverted yield curve, where shorter maturity rates were higher than longer term maturities, may not be as indicative of an upcoming recession as usual.


  • We do not see an immediate recession. However, concerns for the broader economy include the potential global slowdown and decelerations in manufacturing and exports.


At Miles Capital our team-based, disciplined process helps us to effectively navigate through all market conditions, including the volatility we are experiencing now.



The views expressed herein are the current views of Miles Capital as the stated date and are provided for informational purposes only.  They are believed to be correct, but accuracy and completeness cannot be guaranteed and should not be relied upon for legal or investment decision purposes.   All expressions of opinion and predictions presented are subject to change without notice.  Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.  Past performance is not a guarantee of future results.

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