Healthcare is hot, energy is not. That’s the message in the trailing one-year total return data for ETFs that track the major sectors for the US equity market (see list below for tickers and links).
● Treasuries Advance as NY Ebola Case Boosts Safest Assets | Bloomberg
Treasuries rose the most in a week after a doctor in New York City tested positive for Ebola, spurring demand for the haven assets amid concern any outbreak of the virus can weigh on the global economy.
● German consumer morale lifts going into November | Reuters
German consumer morale picked up heading into November after slight declines in the previous two months, suggesting consumers feel confident about their own incomes and are willing to spend even though Germany’s economy is slowing.
● UK GDP rises by 0.7% in third quarter | BBC
UK economic growth slowed in the three months to September, with the economy expanding by just 0.7%, the Office for National Statistics said.
● China Leading Economic Index Jumps 0.9% In September | RTT
A leading index for China’s economy climbed 0.9 percent in September, the latest survey from the Conference Board revealed on Friday – following the 0.7 percent gain in August and the 1.3 percent jump in July.
● Europe’s eco/policial future will be determined in coming days | Reuters
Europe is at a make or break moment. Two very different events on Sunday, occurring at opposite ends of Europe, will largely determine the entire continent’s direction for years ahead: the parliamentary election in Ukraine and the bank “stress tests” and Asset Quality Review conducted by the European Central Bank.
Three economic updates today provide more evidence that moderate growth endures for the US. The numbers du jour—weekly jobless claims, the Chicago Fed National Activity Index, and Markit’s US purchasing managers index (PMI) for manufacturing—paint an upbeat profile of the macro trend. The main takeaway: the deflationary threat festering in Europe has yet to take a bite out of the US economy’s forward momentum.
● US Inflation Remains Tame | Wall St Journal
Consumer-price index ticks up 0.1%, likely giving Fed leeway on rate hikes
● Euro-Area Manufacturing Grows as Risk of Recession Eases | Bloomberg
A Purchasing Managers’ Index showed manufacturing in the region unexpectedly grew this month, while Spain’s economy showed signs of a further recovery, with third-quarter unemployment dropping to the lowest level since 2011. In Germany, factories rebounded from a slump in September.
● Oil slump leaves Russia weaker than decaying Soviet Union | Telegraph
Russia had the chance at the end of the Cold War to build a modern, diversified economy, with the enthusiastic help of the West. That chance has been squandered
● Bond funds stock up on Treasuries in prep for market shock | Reuters
U.S. corporate bond funds this year are adding Treasuries to their holdings at more than twice the rate of corporate debt amid concern that the struggling European economy and potential changes in Federal Reserve policy will drag down profits at U.S. corporations.
● Ebola, GDP & Markets | Cumberland Advisors
It is becoming clear that overcoming the challenges in the fight against Ebola is related to the size of an economy. The very poor countries face the greatest difficulty.
The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to decelerate a bit to +0.03 in tomorrow’s update for September, according to The Capital Spectator’s median econometric point forecast for several econometric estimates. The projection is marginally below August’s +0.07 reading, which reflected above-average economic growth relative to the historical trend. Only values below -0.70 indicate an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Based on today’s estimate for September, CFNAI’s three-month average is expected to remain at a level that’s historically associated with growth at a marginally above-trend pace.
Welcome to the big snapback… so far. The prices of risky assets have made a huge U-turn in recent days. Battered and bruised has given way to robust and rising. It may turn out to be a fleeting resurgence, but the rebound looks impressive at the moment. US real estate investment trusts (REITs) in particular have delivered a rousing revival. But while most of the global markets have perked up, there’s been a notable exception: commodities, which in broad terms aren’t participating in the party.
● Existing home sales hit highest level in 2014 | USA Today
Existing home sales last month were the strongest this year, but remained below year-earlier levels for the 11th straight month, the National Association of Realtors said Tuesday.
● US Q3 Real GDP Still Looks Solid | First Trust
After 4.6% growth rate in Q2, we expect real GDP to rise at a 2.9% annual growth rate in Q3.
● US Same-store sales eased 0.3% | IBD
Same-store sales eased 0.3% in the Oct. 18 week, ICSC-Goldman said. It helped nudge the yearly rise down to 2.1% from 3.8% in the prior week.
● China seen staying away from rate cuts | South China Morning Post
China’s central bank is likely to hold its line against an interest rate cut even as growth slows to a quarter-century trough, as the politics of reform influence the conduct of monetary policy, government sources involved in internal policy discussions say.
● Ukraine’s Vote, Russia’s Fate | Project Syndicate
When Ukraine’s voters go to the polls on October 26, not only the fate of their country will be at stake; so will the future of a significant part of Europe.
It’s still touch and go with risk warnings according to stock market volatility, but the threat pulled back from extreme levels yesterday. The VIX (a measure of the implied volatility of S&P 500), for instance, dipped below 20 for the first time since October 9. A day or two of slightly lower vol after the recent surge in risk could easily turn out to be noise and so it’s not yet obvious that the roller coaster ride is over. But for the moment, the decline inspires a bit of optimism that the market may be headed for calmer waters.
● China’s growth slowest since global crisis, annual target at risk | Reuters
China grew at its slowest pace since the global financial crisis in the September quarter and risks missing its official target for the first time in 15 years, adding to concerns the world’s second-largest economy is becoming a drag on global growth.
● Analysts: VIX Back In Risk Friendly Waters; S&P nears 1,900 | MNI
The CBOE’s volatility index or VIX moved back into sub 20, risk-friendly waters Monday, with market players eager to see if the move will be sustained.
● Income Growth: The Taxman Cometh | Wells Fargo
Roughly five years into the recovery, income growth has been notoriously slow to pick up. Between 2009 and 2013, before-tax income grew a mere 1.5 percent. After taxes, income shrank 7.2 percent
● WTI Climbs Amid Estimates of U.S. Gasoline-Supply Drop | Bloomberg
West Texas Intermediate rose for the third time in four days amid speculation motor-fuel inventories shrank in the U.S., the world’s biggest oil consumer. Brent advanced in London.
● EU to mediate in gas dispute between Ukraine and Russia | Deutsche Welle
The European Union is set to host gas talks between Russia and Ukraine aimed at securing a payment deal and avoiding disrupting gas supplies this winter.
Economic worries for the global economy are again taking a toll on sentiment these days, but the US macro trend shows few signs of stress, based on data through September. It remains to be seen if the resiliency holds up in the October profile. An early clue arrives on Thursday, with the initial estimate of manufacturing activity for the US via Markit’s business survey release for October. Meantime, the rear-view mirror continues to show a considerable degree of positive momentum for the US overall, based on the September update of a diversified set of 14 economic and financial indicators.