The Week Ahead: Will Investor Confidence Remain High?

We head into the final week of the second quarter with investors buoyed by positive signs from the Federal Reserve and on trade. Equity markets set all-time highs after Fed chairman Jerome Powell hinted that the central bank may loosen its monetary policy in the coming months amid China-U.S. trade tensions and other signs of weakness in the economy. Meanwhile, with President Donald Trump scheduled to meet with Chinese President Xi Jinping at the Group of 20 summit this week in Japan, investors are optimistic that a trade truce can be reached that would stave off new tariffs.

But the current expansion is a decade long, although stock investors appear confident that the Fed can help forestall the inevitable recession. But after the Fed's dovish statement, bonds also rallied, sending the yield of the 10-year Treasury below 2%, the lowest since late 2016, and the price of gold, considered by investors to be a safe haven, almost hit a six-year high. Depending on your view of the economy, these latter moves could be a sign of trouble down the road.

On the data front this week, consumer confidence, new home sales, and personal spending numbers will give investors insight into how flush consumers are feeling.

The earnings calendar picks up steam next week. A host of consumer defensive names are reporting, including 4-star stocks Walgreens Boots Alliance WBA, Conagra Brands CAG, and General Mills GIS. Walgreens and Conagra have narrow Morningstar Economic Moat Ratings; General Mills owns a wide moat. Four-star, narrow-moat FedEx FDX also reports, two weeks after announcing that it will not renew its domestic U.S. Express contract with Amazon.com AMZN.