October proved to be a notably volatile month for global markets, standing out in comparison to recent trends. However, amidst the fluctuations, some sectors emerged victorious. In particular, U.S. Real Estate Investment Trusts (REITs) excelled, finishing the month with impressive gains. The MSCI REIT Index surged by 10% in October, marking its most significant monthly increase in four years. Other markets also saw positive outcomes, though they were less dramatic; for instance, U.S. stocks, as tracked by the Russell 3000, recorded a respectable rise of 2.7% by the end of the month.
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The ISM Manufacturing Index is anticipated to remain steady at 56.6 in the upcoming October update, according to the median econometric forecast from The Capital Spectator. This estimate remains significantly above the neutral benchmark of 50.0, indicating that the current outlook for U.S. manufacturing is firmly in growth territory.
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● Dual Momentum Investing:
An Innovative Strategy for Higher Returns with Lower Risk
By Gary Antonacci
Review via Alpha Architect
If there is a maestro of momentum investing, it is undoubtedly Gary Antonacci. He has maintained the blog optimalmomentum.blogspot.com for several years and recently published a book titled “Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk.” This book consolidates his extensive knowledge in momentum investing into a practical approach accessible to investors.
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Today’s report on personal spending and income in the U.S. for September fell short of expectations. Economists had predicted a 0.3% increase in income, but the actual data revealed a modest 0.2% rise. Consumption performed even worse, dropping by 0.2% compared to the anticipated 0.1% gain based on consensus forecasts from Econoday.com. While September showed softness in spending and income, a year-over-year perspective provides a brighter outlook due to robust growth in private-sector wages. Although the monthly statistics indicated a decline, a broader view still offers reasons for optimism.
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● German retail sales experience their largest decline in over seven years | Reuters
Retail sales in Germany recorded their steepest monthly drop in over seven years in September, suggesting that consumers are becoming a less reliable pillar for Europe’s largest economy.
● BOJ surprises markets with additional easing as inflation slows | Reuters
The Bank of Japan surprised global financial markets with an unexpected expansion of its extensive stimulus plan, admitting that economic growth and inflation have not accelerated as anticipated following an April sales tax increase.
● Eurocoin Indicator Declines for the Fourth Consecutive Month | RTT
An index reflecting the current economic condition within the eurozone fell for the fourth month in October, based on a survey by the Bank of Italy and the Centre for Economic Policy Research.
● U.S. Economy Grows at a Steady Rate | Wall Street Journal
Military spending and a reduction in imports contributed to a 3.5% gain in GDP amid increasing global challenges.
● German EU-harmonized inflation slows to 0.7% | MarketWatch
German consumer-price inflation unexpectedly eased in October, according to the country’s statistics office, highlighting continued risks of low inflation or deflation in the eurozone.
● Eurozone Economic Sentiment Rises for the First Time in Four Months | MNI
Economic sentiment in the eurozone increased in October, showing its first improvement in four months, slightly exceeding the long-term average, according to data from the European Commission.
Tomorrow’s report on U.S. personal consumption spending for September is projected to show a 0.3% increase compared to the previous month, based on the median econometric forecast by The Capital Spectator. This estimation indicates a slowdown in growth compared to August’s 0.5% rise.
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The U.S. economy outpaced expectations in the third quarter of this year, as revealed by this morning’s “advance” GDP estimate for the July to September period. Economic activity surged by 3.5% in Q3, as reported by the Bureau of Economic Analysis, significantly exceeding the consensus forecast of 3.0%, according to a survey by Econoday.com. Additionally, the latest weekly jobless claims update continues to indicate robust growth in the labor market. While today’s figures may not be surprising for those who have been following the macro updates closely, they remain encouraging for the outlook of moderate U.S. growth in the near future.
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As Halloween approaches, the unsettling increase in U.S. stock market volatility observed earlier this month seems to be less alarming now. Specifically, the Volatility Index (VIX) for the S&P 500 has significantly decreased over the past week, settling at a level yesterday (October 29) that mirrors pre-correction conditions before the significant downturn impacted prices in the first half of October. This decline in risk is considered a positive sign, although caution is warranted. Notably, other measures of market volatility have yet to corroborate the VIX’s drop. Consequently, it may be too soon to conclude that October’s heightened volatility was merely a false alarm concerning the potential for continued market unease.
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● NATO Monitors Unprecedented Russian Air Activity in Europe | Wall Street Journal
Russian military aircraft have conducted extensive aerial maneuvers across Europe this week, a scale rarely seen since the Cold War, prompting NATO jets to respond, highlighting the escalated tensions between East and West.
● Fed Concludes Bond Buying; Rates May Remain Low for Years | Street.com
Six years after the Federal Reserve intervened during the financial crisis, it is terminating its bond-buying program in October.
● German Unemployment Unexpectedly Decreases | Bloomberg
German unemployment fell unexpectedly in October, reflecting companies’ confidence in the resilience of Europe’s largest economy.
● Spanish Economy Grows for the Fifth Consecutive Quarter | BusinessWeek
Spain’s economy expanded by 0.5 percent in the third quarter compared to the previous three-month period, marking its fifth straight quarter of growth.
● U.S. Mortgage Applications Hit Lowest Level Since February | Reuters
Recent U.S. mortgage applications for home purchases have fallen to their lowest level since February, as interest rates on 30-year loans edged up from the recent 16-month lows, an industry report revealed.
### Conclusion
Overall, October’s market dynamics presented a mix of volatility and opportunity. While certain sectors like U.S. REITs showcased remarkable resilience, other sectors indicated areas for cautious optimism and potential growth moving forward. Investors and analysts alike will be closely monitoring upcoming economic indicators as we transition into the later months of the year.
