Recent retail sales data for September has shed light on the slowing pace of consumer spending in the United States. While it’s evident that the enthusiasm for consumption has waned over the past few months, annual comparisons suggest that spending is not plummeting into a recession just yet.
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Growing apprehension regarding the global economy is contributing to an increased demand for US Treasuries. “It’s all a global growth fear trade,” states Priya Misra, head of global rates strategy at TD Securities, in an interview with Reuters. The expectation of a continued slowdown in China, combined with forecasts suggesting weaker growth in both the US and Europe compared to earlier predictions, is driving renewed interest in these safe-haven securities. Furthermore, the ongoing expectation of low inflation in the US and elsewhere adds to this quest for safety amid potential disinflation or deflation.
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- US small business confidence showed a slight increase in September | Reuters
- Redbook reports US retail sales declined during the first week of October | DJ
- Eurozone industrial output decreased in August | Reuters
- China’s inflation rate fell to 1.6% year-over-year in September | RTT
- The UK’s jobless rate dropped in the August report | RTT
- China’s GDP growth for Q3 is expected to slow to 6.8% year-over-year | Reuters
Forecasts suggest that US retail sales will see a marginal increase of 0.1% in the upcoming report for September, compared to the previous month. This prediction reflects a slight deceleration from August’s modest 0.2% rise.
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While Mr. Market is currently displaying a less intense cautious outlook than in recent history, the situation still doesn’t seem entirely secure. Although the US Stock Market Crash Risk Index has lessened and estimates of US business cycle risk have pulled back from a spike in late-August and early September, investors may still need to exercise caution. Investing in high-risk strategies might be suitable for those who can accept significant losses if their predictions are incorrect. For conservative investors, the landscape still appears perilous, and it’s wise to remain cautious until more convincing indicators signal a favorable shift.
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- China’s imports and exports saw significant declines in September | Bloomberg
- Germany’s ZEW survey indicated investor confidence dropped to a one-year low in October | Bloomberg
- India’s industrial output increased at the fastest rate in nearly three years in August | WSJ
- German inflation returned to zero in September | RTE
- UK inflation slightly dipped into negative territory in September | MarketWatch
- Angus Deaton received the Nobel Prize in Economics for his work on consumption | Reuters
Emerging markets experienced their most significant weekly gain in nearly four years last week. Analysts remain divided over whether this represents a temporary recovery or the beginning of a lasting restoration in the wake of nearly continuous declines since last April. However, the previous week clearly demonstrated that equity markets in these nations enjoyed a notable rally during the five trading days leading up to October 9.
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- US import prices experienced a smaller decline than anticipated in September | RTT
- US wholesale inventories saw a slight increase in August | Reuters
- Money outflows from emerging markets pose a risk to the global economy | NY Times
- The US NABE Outlook Survey predicts growth between 2.5% to 2.8% through 2016 | MNI
- Gold reached a seven-week high amid ongoing uncertainties regarding the Fed’s rate hike | Bloomberg
● The Courage to Act: A Memoir of a Crisis and Its Aftermath
By Ben S. Bernanke
Review via The New York Times (Michael Kinsley)
While some may find it a challenging read, this memoir stands out as the most comprehensive account of the government’s and financial institutions’ responses to what is now referred to as the Great Recession. The term itself is puzzling; it evokes associations with the Great Depression while also implying that the situation wasn’t overwhelmingly dire. However, Bernanke convincingly argues that, despite it being a challenging period, his and his colleagues’ efforts at the Federal Reserve played a pivotal role in preventing a more severe crisis.
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Speculations about a potential interest rate hike abound as the calendar moves forward. Yet much like predicting the weather or global peace initiatives, nothing is certain. While Fed officials are actively discussing the prospect of tighter monetary policy before the end of the year, the outcome remains unpredictable.
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