3 Concerns for Investors as We Head Into the Fourth Quarter

The weather in Miami in starting to turn nice as we get closer to the end of September. Both the temperature and humidity levels seem to be dropping incrementally on a daily basis. Another birthday has also come and gone - where does the time go? The market is also fast approaching the three-quarter mark for 2019. Despite increasing concerns about slowing global growth, escalating trade wars and even an inverted yield curve, it has been a good year for stocks. The S&P 500 is up in the high teens for the year and almost all the major indices are within shouting distance of the all-time highs they hit in July. While GDP growth will likely drop from last year's 3% level to 2% this year, that is still easily the best mark in the G-7. It is easy to get anxious as we approach the fourth quarter. October has historically been a month where extreme volatility can happen. Last year's fourth quarter swoon also has to be fresh on investors memories as well. While it is hard to predict what lies ahead to close out 2019, here are three worries that should be on investors' minds as we head into the final quarter of the year. Chinese/U.S. Trade Tensions Let's start with the obvious one. Escalating trade tensions have been a core theme for anxiety for over a year now and probably will be for another year at least. The U.S. has managed the impacts well to this point even as Germany's manufacturing sector is seeing recessionary readings. The two largest economies in the world are scheduled to meet again for high level trade talks in October. However, given the amount of 'false starts' on this front so far in 2019, I would not put too much store in any sort of substantial progress being made. Some minor concessions have been made on both sides recently, but I don't think a major deal is reached until after the 2020 election, if then. Hopefully, both sides can at least agree not to escalate things further. This, in itself, would be a nice positive for the market. Iran The September 14th drone/cruise missile attacks on Saudi Arabia's biggest oil facility reminded the world how unstable the Middle East is and how vulnerable much of world's major energy infrastructure is to unconventional attack. I would not be surprised if a similar incident does not happen by the end of the 2019. The reimposition of sanctions and withdrawal from the Nuclear Deal has put the economy of Iran under immense pressure. The Financial Times recently estimated that Iranian GDP will contract by more than 9% in 2019. Given this, another attack to try to destabilize energy markets cannot be ruled out and probably would cause more instability the second time around. Brexit After more than three years of 'dithering' since the Brexit vote in the summer of 2016, Brexit seems to be finally coming to a head as the current 'deadline' is five weeks away. Whether we get a revised deal from the EU, a 'no-deal' Brexit, or a new election is anyone's call at this point as the probabilities seem to change daily. Regardless of the outcome, this is likely to continue to be a worry for global markets until resolved. Personally, I think this issue gets 'punted' once again into 2020. And those are the major concerns I see for the market through year end. Starting in 2020, the November election will start to become a bigger and bigger concern until resolved. However, we will let that be a worry for another day for the time being.

3 Concerns for Investors as We Head Into the Fourth Quarter

U.S./China trade, Iran, and Brexit top the list.

Columnist Conversation

AAP Podcast: This Company Is Not Going 'Solo'

This Weekend on Real Money

AAP Podcast: A Tongue -- and a Market -- Twister: 'Get a Debt Deal Done'

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.