Morning Commentary: Winners and Losers

A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.

Winners and Losers Share this story: Alan Rose Foreign Exchange Senior Trader

Despite an overwhelming amount of economic and political uncertainty, the U.S. economy continues to grow at nearly 2% and shrug off much of this negativity. Many economists are still forecasting growth in the 2% range through the next two quarters supported by a strong consumer. But within that picture of steady growth, there are concerns mounting that the economy will falter to stall-speed of nearly 1% or less. During the last few days, I have been reading numerous stories that reveal a different story about the inner workings of our economy where there are clear winners and losers within our economic and cultural landscape. Here are a few of the key bullet points that I found illustrating this phenomenon: Income inequality: The gap between those at the top and everyone else in the U.S. grew to its highest level in over 50 years according to the census bureau. The issue is beginning to generate greater concern among Americans and could become a more prominent issue for politicians as well as companies. Ultra low interest rates carry a double edged sword: While ultra-low interest rates are supportive for financing home mortgages and car purchases, the prices of those assets continue to climb. Consumers are forced to finance their car loans for longer periods of time to make payments manageable. The average car loan stretches for 69 months which is a new record. Even Major League Baseball is not exempt from the winner and loser phenomenon. Last season saw all-time records for strikeouts and home runs in one season. For the first time ever, four teams had 100 wins while for the second time ever, four teams had 100 losses. America strives to create a level playing field where all citizens have a chance to excel, reach their potential, and be successful. But America does not guarantee positive outcomes and results. Well intended policies many times have unintended consequences that create uneven outcomes for the economy and for its citizens. Let’s hope we do a better job going forward.   HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT: Global stock markets are deep in the red this morning as concerns continue to mount about the state of the U.S. and global economy sending “risk-off” signals through the markets. The very weak U.S. ISM report yesterday is still reverberating through the markets. The U.S. ADP employment report today came in slightly below expectations at 135,000 job gains, and U.S. interest rates are lower again today. Odds for a Fed rate cut on October 31 have jumped from 53% on Monday to 68% this morning. The Swiss franc is the weakest of the majors this morning against both the U.S. dollar and on cross rates as Swiss CPI came in weaker than expected at -0.1% instead of 0.1%. The South Korean won is also very weak as North Korea fired what appears to be a submarine-based ballistic missile.

If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com or call (800) 447‑4133. Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!

Follow City National Bank on social media:

Non-deposit investment products: • Are not FDIC insured, • Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and • Are subject to investment risks, including possible loss of the principal invested. This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.

Unsubscribe from this list  |  Update email preferences This message has been sent to bank@banking.offers.report. Please do not reply to this email. To ensure the delivery of future emails, please add foreignexchange@emails.cnb.com to your email address book or safe sender list. Copyright ©2019 City National Bank – All Rights Reserved. 350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071 City National Bank is a subsidiary of Royal Bank of Canada. TERMS & CONDITIONS  |  PRIVACY STATEMENT NMLSR ID# 536994 | City National Bank Member FDIC