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Week In Review


The U.S. economy added 130,000 jobs in August, below the consensus estimate of 160,000. Average hourly earnings rose 0.4%, while the average workweek increased 0.3%. The unemployment rate was unchanged at 3.7%. Labor force participation rose from 63.0% to 63.2%.

Our Take

The employment report was somewhat weak, especially as 30,000 of the added jobs were temporary census workers. The increase in average hourly earnings and the workweek means consumer spending could remain robust, but employment growth is clearly slowing. This report should give the Fed cover to cut rates at their upcoming meeting but does not appear bad enough for the cut to be 50 basis points.


The British Parliament voted early this week to seize control of the parliamentary agenda to allow a debate on blocking a “no-deal” Brexit on October 31. After debate, the House of Commons passed a bill that says the prime minister must seek a three-month extension for further negotiations with the EU over the terms of Brexit. The only way Brexit could proceed without the extension is if a Brexit deal were to pass Parliament before October 19 or if the body were to explicitly approve a “no-deal” Brexit. PM Johnson immediately called for a general election, in an attempt to consolidate his power. However, the opposition Labour Party has vowed to block elections until the bill preventing a “no-deal” Brexit becomes law.

Our Take

All the Brexit drama boils down to the fact that the British cannot stomach the Brexit terms set forth by the EU, but know that a “no-deal” Brexit could have calamitous effects. Elections could be coming soon and, if they occur, will be tantamount to another referendum on whether the UK still wants Brexit.


Officials from the U.S. and China have agreed to return to the negotiating table sometime in October. The meeting will take place in Washington, D.C.

Our Take

The news of further negotiations was well received by the markets, but there is still a long way to go before the two sides reach an agreement. The protracted conflict is clearly damaging worldwide economic growth, and will continue to do so until a trade deal is achieved.


The Institute for Supply Management’s manufacturing index fell from 51.2 to 49.1 in August. All of the subcomponents of the index were also below 50.

Our Take

The worldwide manufacturing slowdown has now arrived in the U.S., as the ISM index has fallen into contractionary territory. Trade conflicts are a clear cause of the slowdown, as evidenced by the new export orders component of the index falling to 43.3, its lowest reading since 2009. A pickup in the sector is unlikely while trade tensions remain.


Chicago Public Schools issued approximately $350 million of general obligation debt this week. The new issuance follows an S&P rating upgrade last week to BB- and a Fitch upgrade to BB. The ratings agencies cited the district’s balanced budget and an increase in reserves as reasons for the upgrades.

Our Take

Chicago Public Schools’ finances have improved. In addition, the district has received increased support from the state of Illinois under a new funding formula introduced last year. However, the district remains in junk territory and continues to struggle with rising pension costs and labor disputes.

All expressions of opinions are subject to change without notice in reaction to shifting market conditions.  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.  Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.