Is the economy slowing? Last Thursday the Institute for Supply Management (ISM) reported that its manufacturing index dropped unexpectedly; on Friday, employment growth was lower than expected. The strong dollar, which hurts exports, was partly to blame. But some economists think these negative reports are but two of many factors that point toward economic recession: slowing growth in China and other emerging markets, the specter of rising interest rates, dim prospects for corporate earnings this fall, evidence that corporate profit margins are falling, and even the rising power of anti-spending Republicans in the U.S. House of Representatives. #-ad_banner-#Granted, some of… Read More
Is the economy slowing? Last Thursday the Institute for Supply Management (ISM) reported that its manufacturing index dropped unexpectedly; on Friday, employment growth was lower than expected. The strong dollar, which hurts exports, was partly to blame. But some economists think these negative reports are but two of many factors that point toward economic recession: slowing growth in China and other emerging markets, the specter of rising interest rates, dim prospects for corporate earnings this fall, evidence that corporate profit margins are falling, and even the rising power of anti-spending Republicans in the U.S. House of Representatives. #-ad_banner-#Granted, some of these factors are unlikely to impact the market at the same time — notably, if the economy slows, the Fed may delay its long-planned interest-rate increases. But perception matters, and if more signals flash “slowdown” in the coming weeks and months, it will have an impact on investor decisions. As legendary investor Benjamin Graham said, in the short run the stock market is a voting machine. And it pays to be prepared if the votes seem to be tilting away from growth. One way to cope with the risk of economic slowdown — or the perception thereof — is to… Read More