Morning Commentary: 115 Months and Counting

Foreign Exchange - Morning Commentary

115 Months and Counting

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Alan Rose
Alan Rose
Foreign Exchange Senior Trader
Markets are closing the week on a positive and upbeat note despite all the hand-wringing regarding weak data, economic downgrades and little signs of progress on both Brexit and the U.S. government shutdown. 2019 has brought a sea change in market psychology from Q4 2018. U.S. and global equities continue to find silver linings in all the negativity and continue to look past the short term problems and issues that plagued the markets in late 2018.
We will comply along with that line of thinking and today's report will reflect the positive and good in the U.S. economy. The U.S. economic recovery that began after the Great Recession in June 2009 is now at 115 months and counting.  With a bit of luck, this economic recovery could become the longest in U.S. history at over 120 months. The previous record for the longest economic expansion lasted from March 1991 until March 2001.  The U.S. UR dropped to 3.7% last month and that is the lowest in 50 years. To keep that in perspective, the UR reached 24.9% in 1933 during the Depression.
Despite tribal warfare raging on in Washington and the country very much politically divided, our institutions have continued to function above the fray.  In particular, the Federal Reserve should be given much credit for its creative thinking at the onset of the Great Recession and for their measured approach regarding monetary policy over the past years. How long this recovery will continue is dependent on many factors, but if the political will is there to resolve the government shutdown and find a meaningful conclusion to the U.S.-China trade talks, we will continue to see an economic expansion well into 2019 and beyond.
  • Germany reported another weak economic report; the German IFO Business Climate index for January fell well below market expectations to 99.1 against expectations for 100.7 and from 101.0 in December. The expectations component within the data crashed lower to 94.2 from 97.3. This data fits into a recent pattern of weak German and EZ data; the euro, however, remains locked in its recent consolidation and sideways trading pattern as to some degree, this is not new news.
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