The Fed announced last Wednesday that it would keep interest rates unchanged, a decision that markets largely expected. In its statement, the Fed upgraded its view of the economy to growing at a “strong” rate for the first time since 2006, a view encapsulated by last quarter’s strongest gross domestic product (GDP) growth since 2014. Fiscal stimulus has fueled strong business, consumer, and government spending, and the job market has continued to tighten, with the unemployment rate sitting at its lowest point of the expansion.

Economic Growth Supports Higher Rates

In a vacuum, the macroeconomic backdrop suppo

Healthy Job Gains Despite Missing Expectations

The Labor Department’s July jobs report, released on Friday, August 3, confirmed that the labor market remains healthy. Nonfarm payrolls rose 157,000 in July, below consensus expectations for a 193,000 increase; however, an upward revision of 59,000 jobs for May and June more than offset the July miss and helped paint an overall picture of a healthy job market. With the revisions, job growth for May and June averaged 258,000, the strongest two-month period since July 2016. These strong summer months lifted 3-month average payroll growth to 224,333 and 1-year average payroll gro

Last week we had the pleasure of joining just over 3,500 LPL advisors at our Focus 2018 national conference in Boston. Many of you reading this were likely among them. The conference is an excellent opportunity for us in the LPL Research department to interact directly with our clients, and to learn about what they like and don’t like so we can better tailor our publications and investment options to them. Focus also gives our advisors a chance to ask us questions about the markets. In this week’s commentary, we share the most frequently asked questions from Focus 2018.

1.  Will we have a full-blown trade war?

Active management may be poised for a comeback. During the past several years, it’s been difficult for active managers to outperform equity benchmarks. There are a number of reasons for that, including the strength of the market, market distortions from central bank bond purchases, and high correlations between stocks. However, the tide has started to turn, which we believe sets active managers up for better relative performance opportunities in the coming years.

Manager Conditions Are Improving

Several of the market conditions since the financial crisis that have presented headwinds for active managers are starting to