Happy Halloween! Today is the day when all things spooky and scary are embraced to the fullest. Haunted houses with surprises around each corner are considered “fun,” but the market doesn’t necessarily feel the same way when it is spooked or taken by surprise.

So, what spooky surprises do we have to look out for as we approach the end of the year?

Sugar Highs and All-time Highs

To go along with your kid’s sugar high, the resilient stock market made all-time highs in the 3rd quarter. Unfortunately, the economic data appeared to be singing a different tune as there is ample evidence to suggest weakness is brewing in U.S. and global manufacturing. Add in talk of impeachment inquiries, radical political policies, the Fed’s interest rate cuts, and trade wars and you have a potentially hostile environment ahead.

Ghosts, Goblins, and Trade Deals

The not so surprising headlines of an on again/off again China trade deal continued to jump out from around corners and kept the market in a state of suspense. Despite the back and forth, we are paying close attention to whether or not these negotiations result in an actual lessening of the trade headwinds. This could ultimately tip the scale for the future direction of the economy. If tariffs are not halted and reduced, then the chances of this expansion lasting another year will diminish.

Economic Tricks and Treats

The tricks and treats are abundant when looking near and far. Domestic and geopolitical dramas will require close attention over the coming months, especially the ongoing trade conflict. On a positive note, current corporate and economic fundamentals remain solid, which are important factors in determining the longer-term path of markets. Even though we do not see recessionary conditions in the next 12 months, this is an environment in which factors that could lead to market uncertainty need to be monitored closely.

Outlook: NEUTRAL

The economic growth rate peaked and is now gradually slowing down. While our risk management model continues to signal caution, our “recession watch” indicators suggest the danger of recession in the next 6-12 months is not likely. We remain focused on higher quality and late cycle beneficiaries as we expect the recent volatility to persist.

How Can We Help?

At GGM, aligning your investments with the prevailing economic environment is just one of the ways we strive to add value to your portfolio. If you are concerned about whether your investments are primed for the current market and allocated to meet your objectives, we recommend our complimentary portfolio checkup. Contact us today!