The Financial Times observes that the Federal Reserve’s forecast for higher interest rates in the next several years is accompanied by expectations of slower economic growth and rising unemployment. Given the tendency for US recessions to coincide or closely follow periods of tighter monetary policy, it’s hard to ignore the potential for trouble down the road.
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Trump orders more sanctions on North Korea: The Hill
Will North Korea test an H-bomb in the Pacific? Bloomberg
US Leading Index rises again in Aug, signaling growth ahead: Conf. Board
US jobless claims fell sharply last week: Reuters
Philly Fed Mfg. Index increases to 3-month high in September: MarketWatch
US FHFA House Price Index up 6.3% y-o-y in July: Builder
Unless research inputs are continuously raised, growth will slow: VoxEU

The inability of the crowd to earn anything close to Mr. Market’s performance is a hardy perennial. Although replicating market betas via low-cost index products has become child’s play, the persistent failure by most investors on this front is striking, as a recent study by Dalbar reminds.
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Fed leaves rates unchanged and OKs unwinding of balance sheet: CNBC
Major US equity indexes are mixed after Fed announcement: RTT
US existing home sales fall in August to lowest level in a year: HousingWire
Another effort to kill Obamacare scheduled for vote next week: Reuters
SEC’s computer system was hacked last year: NY Times
Most Fed officials expect more rate hikes: Federal Reserve

Recent hurricanes have taken a bite out of US economic momentum, but the trend is only battered rather than broken. Surveying a broad set of indicators still points to moderate growth for the near term. Recession risk, in short, remains low for the US, based on the numbers published to date.
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Hundreds dead after powerful earthquake strikes central Mexico: BBC
Puerto Rico braces for Hurricane Maria: AP
US single-family housing construction fell for a second month in Aug: Reuters
Mixed economic signals ahead of today’s Fed announcement: Reuters
Trump threatens to “destroy” N. Korea in UN speech: USN&WR
Norway’s sovereign wealth fund reaches the $1 trillion mark: Bloomberg
Confidence in US economy ticked up last week: Gallup

The Federal Reserve is expected to leave interest rates unchanged in tomorrow’s policy announcement, but the crowd is anticipating that the central bank will begin to pare its $4.5 trillion debt portfolio. If unwinding the balance sheet is about to begin, which implies tighter monetary policy, the first step in the process arrives as Treasury yield spreads are close to the lowest point since the last recession weighed on the US economy.
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US Defense Secretary hints at miltary options for N. Korea: Reuters
US homebuilder sentiment dips in wake of hurricanes: HousingWire
Buybacks for S&P 500 stocks are down 25% since Q1 2016: MarketWatch
Another record high for US equities: MarketWatch
Market value of US gov’t debt as % of GDP near 70-year high: Dallas Fed

Stocks in the US rebounded last week, posting their strongest weekly gain so far this year and topping the performance ranking for the major asset classes, based on a set of exchange-traded products.
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Hurricane Maria is strengthening, heading for Carribean islands: CNN
Analysts blame weak retail sales and industrial output on hurricane: Reuters
Economists trim US Q3 GDP forecasts after soft-than-expected reports: CNBC
Consumer sentiment dips in Sep. as economic concerns rise: UoM
NY Fed mfg. index in Sep. sticks close to 3-year high: MarketWatch
US companies hold a huge chunk of corp. debt market: FT
US business inventories edge higher in July: FoxBusiness
BIS says rising cryptocurrency risk too big for central banks to ignore: BBG
Nominal US GDP growth stable but still below expectations: Macro Musings