The markets seem to be in a state of limbo as we approach the US election, which is less than a month away. Many major asset classes seem to be stuck, failing to exhibit significant movement. This is hardly surprising. Investors are likely holding their breath, pondering the implications of the election outcomes. The pressing question at hand is: Who will emerge as the next president? However, this is merely the first of many inquiries to consider.
The energy sector plays a vital role in both the US and global economies, warranting its inclusion in asset allocation strategies. However, its recent performance as an investment has left much to be desired. Or has it?
Eli Lilly has paused its Covid-19 antibody trial due to safety concerns: SN
The Supreme Court has ruled that census counting may conclude before October 31: CNBC
IMF has reduced its growth outlook for the global economy in 2021: CNN
JPMorgan and Citigroup warn that the US economic recovery still faces risks: WSJ
The debate surrounding the relevance of the equity size factor is intensifying: II
China’s stock market value has reached a record high of $10 trillion: FT
The most fragile local economies in the US face a grim outlook amid the pandemic: Reuters
Eurozone’s industrial output continued to rise in August, albeit at a slower pace: MW
Small business optimism in the US has been on the mend in September: NFIB
Core consumer inflation in the US held steady at a moderate 1.7% year-on-year for September: LD
Since the market’s low on March 23, all US equity sectors have experienced a rebound, with consumer discretionary stocks leading the pack, as evidenced by a selection of exchange-traded funds up to market close on October 12. Technology follows closely behind. Notably, these rallies have driven prices well above the general market’s recovery from the depths of the coronavirus downturn in late March.
Johnson & Johnson has paused its Covid-19 vaccine trial due to an unexplained illness in a participant: SN
A contentious clash arose between Democrats and Republicans in the initial Senate hearing regarding Barrett: FTE
A recent study reveals that contracting Covid-19 a second time poses a risk: BBG
Pharmaceutical companies are eyeing the potential for substantial profits from Covid-19 vaccines: NYT
The White House is advancing arms sales to Taiwan: Reuters
Central banks have taken aggressive actions this year to finance fiscal spending: BBG
Wall Street is optimistic about a potential ‘Blue Wave’: II
The UK has seen a record rise in job cuts over the three months ending in August: BBG
Investor sentiment in Germany has unexpectedly fallen in October: Reuters
Most large economies will find it challenging to recover from this year’s losses in 2021: BBG
An overall, equal-weighted index of commodities led the charge last week, significantly outpacing the performance of other major asset classes, according to various exchange-traded funds. Following closely behind were US and emerging market stocks.
The Senate hearing concerning Amy Coney Barrett commenced today: CNN
Consider the ramifications of the Supreme Court struggle over Barrett: BBC
Discussions surrounding the stimulus have stalled in the Senate: Vox
Economic recovery in Europe appears to be diminishing: NYT
The Nobel Prize in Economics was awarded for advancements in commercial auctions: CNBC
The IMF is holding its annual meeting this week amid uncertain economic conditions: BBG
China has begun testing a digital currency issued by its central bank: TC
The yield spread between 10-year and 3-month Treasuries remains at a four-month high:
Phillip Brown, et al.
Summary via publisher (Oxford U. Press)
The theory of human capital, which posits a direct connection between educational investment and individual and national prosperity, has shaped public policy surrounding education and labor for over fifty years. In *The Death of Human Capital?*, authors Phillip Brown, Hugh Lauder, and Sin Yi Cheung contend that the narrative of human capital is a tale of unmet expectations: investing in education does not guarantee higher earnings or national prosperity. Instead of discarding human capital theory, the authors propose a reframed concept in an era dominated by smart machines, suggesting that the true issue lies not in automation and AI rendering work obsolete, but rather in the scarcity of quality jobs that provide meaningful and rewarding opportunities.
Keep (Stimulus) Hope Alive: The US stock market is on an upward trajectory, recovering from September’s downturn. Vanguard Total US Stock Market (VTI) has seen its second consecutive weekly gain with a remarkable 4.1% increase at the week’s end (October 9). The fund is now just shy of its record closing price of 180.50 reached on September 2. The prevailing lesson remains: overlook the temporary downturns as they tend to be short-lived.
Index-based investing is often regarded as a measure against active strategies, and rightly so. Nonetheless, it’s important to recognize that indexing also embodies a distinct investment strategy, possessing various advantages and disadvantages that can complement active approaches.
In conclusion, the market landscape is punctuated by notable fluctuations and uncertainties as the US heads towards the election. Various sectors are navigating their own challenges, from the fluctuating performance of energy stocks to the mixed responses from small businesses. As we see trends evolving, maintaining a watchful eye will be essential for investors looking to steer through these unpredictable times.
