Weekly Market Commentary 08/10/2018

While the economy shows few signs of faltering from the second-quarter’s solid performance, it remains to be seen how it weathers a swirl of contradictory forces that are gathering force. For sure, it has a powerful wind at its back, namely a robust job market, which removes the threat of a recession over the immediate future. As well, the tax cuts enacted last year and the increased spending bill passed earlier this year are still paying dividends that should sustain tailwinds through 2019, albeit with diminishing force. But the road ahead is likely to be bumpier than the one just traveled. Some of the hurdles, such as Fed-induced higher interest rates, are a natural byproduct of the economy’s strength. Others have less benign roots, highlighted by trade tensions and geopolitical disruptions that could undercut household and business confidence, stoke heightened turbulence in the financial markets and deliver a meaningful blow to growth.