The recent decline of over 3% in US equity prices raises questions: Is this merely a fluctuation, or the onset of a prolonged downturn? What is clear, however, is that the downturn was not entirely unforeseen, especially considering the impressive performance of US stocks in both relative and absolute terms over the past few months.
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Hurricane Michael wreaks havoc in Florida and is moving toward the Carolinas: CNN
US apprehends Chinese military intelligence officer for economic espionage: NY Times
US intelligence reveals Saudi Crown Prince ordered journalist Khashoggi’s detention: CNBC
US futures signal further selling pressure on Thursday: CNBC
Trump claims the Fed ‘Has Gone Crazy’ following a steep market decline: BBG
US Treasury Secretary labels market decline as ‘normal correction’: CNN
US producer prices show recovery in September: Reuters
Wholesale inventories in the US rose robustly by 1% in August: MarketWatch
Business inflation expectations for September rose to 2.3%, marking a six-month peak: Atlanta Fed
California’s economy may face increasing recession risks: NY Times
US stock market experienced a 3.3% decline on Wednesday, the steepest drop since February: CNBC
Gold remains a crucial component of investment portfolios in various sectors. The rationale behind this varies among investors, often resembling fervent beliefs in the yellow metal’s mysterious qualities. From a data analysis perspective, gold’s role in portfolio design is relatively straightforward; it tends to correlate inversely with the US dollar. Therefore, incorporating gold into portfolios might be better seen as a type of foreign exchange investment rather than an infallible safeguard against market volatility.
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Is China’s over $1 trillion Treasury portfolio a potential risk in the trade war? NY Times
Trump reiterates threats of additional tariffs on Chinese goods: Reuters
IMF warns investors are underestimating the risk of a potential financial crisis: Bloomberg
US Treasury Secretary cautions China regarding currency devaluation: FT
Hurricane Michael strengthens to possibly strike Florida’s Panhandle: WaPo
Nikki Haley’s surprising resignation shocks GOP: The Hill
Trump claims the Fed is raising rates too aggressively: Politico
Sears reportedly nearing bankruptcy filing: CNBC
US Small Business Optimism Index remains close to a 45-year high in September: NFIB
The search for deep-value opportunities in the ETF market yielded a limited selection in August, while markets were thriving. Now, following recent sell-offs affecting nearly all sectors of global equities, bonds, and real estate securities, let’s reassess the opportunities available. Although commodities have shown stronger performance recently, they were already feeling the strain, leaving several relative bargains in this asset class.
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IMF reports: trade tensions will impact economic growth in the US and China in 2019: CNN
Trump overlooks UN’s critical climate change report: NY Times
Hurricane Michael intensifies as it approaches Florida’s Panhandle: Reuters
US Treasury yields rise to new multi-year highs in early Tuesday trading: CNBC
Nobel Prize in Economics awarded for work on climate change and technological innovation: WaPo
No political resolution anticipated for increasing US debt: Bloomberg
Outside of broadly categorized commodities, all major asset classes reported losses during the first week of October, according to a range of exchange-traded products. Emerging markets faced the steepest declines among the widespread losses affecting global markets.
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Did the GOP trade congressional majorities for a conservative Supreme Court? CNN
Senate Majority Leader labels opposition to Kavanaugh as a ‘gift’ for the GOP: WaPo
US Secretary of State mentions “fundamental disagreements” with China: BBG
North Korea expresses readiness for inspections of its missile and nuclear facilities: Reuters
Khashoggi’s situation poses a significant challenge for US-Saudi relations: WaPo
UN climate report warns of high risk from climate change by 2040: NY Times
Tropical Storm Michael expected to impact Florida’s Gulf Coast as a hurricane: CBS
China’s central bank implements stimulus measures to support the economy: SCMP
Far-right candidate leads in the first round of Brazil’s presidential election: BBC
US job growth slowed in September as the unemployment rate dipped to 3.7%: Reuters
The 10-year Treasury yield surged to 3.23% last week, the highest since 2011:
By Howard Marks
Adapted excerpt via Bloomberg
Every so often, during times of economic prosperity, a belief surfaces that the natural cycles of the market have been permanently disrupted—suggesting that downturns no longer need to be a concern. For instance, prior to the Great Depression in 1929, an auto executive proclaimed, “Our current prosperity will remain unbroken.” Similarly, in 1996, the Wall Street Journal reported, “The big, bad business cycle has been tamed.” Furthermore, former Treasury Secretary Tim Geithner noted in his memoir that there was a widespread belief in 2003 that improved financial policies would eliminate the risk of future financial crises.
Such viewpoints presume an unceasing era of economic growth where asset values escalate indefinitely and potential market corrections become irrelevant. However, this “it’s different this time” mindset is dangerously misguided and can lead to severe consequences.
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In September, US private payrolls increased by only 121,000, significantly below the consensus estimate of 175,000. This figure also stands in stark contrast to August’s revised surge of 254,000, according to the latest data from the Labor Department. Despite the unexpected slowdown, the year-over-year growth rate has edged up to 2.0%, the highest level in two years.
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