Market worries over decelerating growth, earnings outlooks, rising interest rates, and tariff wars have all been discounted into stock prices in some measure at this point. Valuations and multiples have been compressed, in some cases fairly dramatically, and market volatility has increased.

Yet, one does get the sense after a number of speeches by various members, that the Federal Reserve is not “religious” about raising interest rates, rather, will focus on incoming data. After all, one need only speak to a number of CEO’s of global enterprises to ascertain that all is not what it once was regarding near term earnings prospects. As to the tariff wars, politicians are not likely to play the long game for fear of losing elections owing to a decelerating economy, so we would speculate some resolution is forthcoming shortly. And, even with a disappointing earnings season in aggregate, pockets of strength were evident.

The self –reinforcing mechanism of perceived stock market wealth, or lack thereof, that impacts consumer spending could reverse, market declines tend to lead to a pullback in spending. While declining energy prices could lead to an increase in spending as well. Already Walmart, which recently reported disappointing earnings results, did forecast a good Christmas selling season.

So there is reason for optimism. Bargain hunters may well start sorting through the equity wreckage prompting a year-end rally.

Hope springs eternal.

Bruce