In November, U.S. equities powered higher for a ninth month this year, which was driven by improving prospects for a China trade deal, a “wait and see” stance from the Federal Reserve, and rising consumer sentiment figures. While a phase one trade deal between the U.S. and China has still not been signed, both sides displayed increased optimism over the past month. Additional tariffs of 15% on $160 billion of Chinese goods are set to go into effect on December 15th, which will likely be a key date to watch. Markets have rallied with the anticipation that a deal will be signed, and any delay could lead to a sell-off. At a speech in November, Federal Reserve Chairman Jerome Powell reiterated the Fed’s commitment to a 2.00% inflation target. This 2.00% level remains key to how the Fed will act with respect to monetary policy in the near term. Five-year inflation expectations are currently around 1.72%, which we believe will prevent the Fed from raising rates again in the short run. In fact, additional interest rate cuts are the more likely scenario should any economic weakness persist. The Fed’s next policy meeting is scheduled for December 10th. As we have stated in the past, consumer spending drives approximately 70% of the U.S. economy and is the single largest factor driving growth. The University of Michigan Consumer Sentiment Index rose to 96.8 in November from 95.5 the prior month, which tells us consumers will be more willing to spend going into the holiday shopping season. Any sustained pullbacks in consumer sentiment or spending must be watched closely as they could have negative implications for risk assets. We are of the opinion that stocks could move higher from here. There are still a large number of investors who were frightened of a potential recession at the end of last year and have sat out the 2019 rally. This is evidenced by the fact that U.S. money market assets rose from $2.8 trillion in the first quarter of 2018 to $3.2 trillion in the second quarter of 2019. The “fear of missing out” could push these investors back into the market, even at the elevated levels that currently exist. With the Federal Reserve maintaining a “wait and see” attitude and consumer spending remaining healthy, the primary factor driving stocks in December will be whether a trade deal with China can get signed.