US economic activity has slowed recently, but the downshift still leaves the economic trend humming at a respectable pace, based on a broad set of indicators published to date.
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Japan tells S. Korea: N. Korea threat is “critical, imminent”: Reuters
Chicago Fed Nat’l Activity Index bounces back in Sep: MarketWatch
Business economists expect firmer growth in fourth quarter: CNBC
Will new tax cuts hurt the US economy? CNBC
Eurozone PMI: new jobs increase at fastest pace in over a decade: IHS Markit
US gov’t fiscal budget deficit is deepest in 4 years for FY2017: Haver Analytics
Betting on a flatter yield curve is the new new thing: Bloomberg

Losses dominated the major asset classes last week, based on a set of exchange-traded products. But three corners of the global markets bucked the trend with gains: US stocks, junk bonds in the US, and high-yield bonds in foreign markets.
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Catalonia crisis deepens after Madrid decides to take control: BBC
Italy’s Lombardy and Veneto regions vote for autonomy: Bloomberg
Japan’s Abe wins majority in parliamentary election: Nikkei
Trump outlines plan for “biggest tax cuts ever” in TV interview: Fox
US existing home sales rebound in September: Reuters
Yellen: Fed making “good progress” reducing its bond portfolio: NY Times
Is the oil market underestimating China’s demand?: Bloomberg
Bitcoin market cap tops $128 billion: Sydney Morning Herald
US 10-year Treasury yield rises to a 3-month-plus high:

The Oct. 22 edition of The US Business Cycle Risk Report has been published and emailed to subscribers.

● A Century of Wealth in America
By Edward N. Wolff
Review via Publishers Weekly
Wolff (Top Heavy), an economics professor at New York University, will remind many of Thomas Piketty’s Capital in the Twenty-First Century with this comprehensive and thorough study of the accumulation, distribution, and preservation of wealth in the United States. Wolff confirms the middle class’s increasingly precarious standing and the rise of income inequality. As to who the rich are in America, he shows that they are overwhelmingly white, married, highly educated, older, and self-employed, most likely in finance or business and professional services. And the remaining 99%? Their incomes have stagnated since the 1970s, despite the compensatory addition of many women to the workforce and huge increases in household debt levels—the latter, Wolff writes, just to maintain living standards, not to “binge” on consumption.
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Yields are still low but the Federal Reserve is expected to lift interest rates further. Conventional wisdom says that this scenario makes bonds a toxic asset class going forward. Maybe, but the analysis is more nuanced when we consider fixed-income from an asset allocation perspective, as a recent report from AQR Capital Management advises.
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UK prime minister asks EU for help with Brexit: Guardian
Trump favors Fed Governor Powell for next Fed chief: Politico
Analysts predict low returns across asset classes: Bloomberg
US Leading Index falls in Sep–first decline in 12 months: Conference Board
US jobless claims fall to 44-year low for week through Oct 14: MarketWatch
Philly Fed Mfg Index surprises forecasters with a solid rise for Oct: RTT
La Nina expected to bring warmer-than-usual temps to US this winter: CNBC

A rising number of investors are anxious about the “bull market in everything”, but the markets are calm, based on rolling 90-day volatility (standard deviation). It may be the calm before the storm, although research on volatility clustering suggests that the tranquil times can roll on for longer than expected. The tide will turn eventually, of course, and perhaps soon, but the rear-view mirror at the moment shows that the landscape is unusually serene across the board for the major asset classes in recent history, based on a set of exchange-traded products via rolling 90-day standard deviation of one-day percentage returns.
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China’s Q3 GDP growth rate ticks lower at 6.8% vs. year earlier: RTT
Spain set to impose direct rule on Catalonia on Saturday: Reuters
Year-ahead US inflation expectations tick down to 1.8% pace: Atlanta Fed
Dallas Fed chief: lower 10-year Treasury yield may be a warning sign: Reuters
US housing construction slows in September: HousingWire
Conservatives campaign against Yellen’s reappointment to Fed: Bloomberg
Treasury Secretary says stocks wil fall sharply without tax reform: LA Times
A new milestone for the Dow Jones Industrials: closing above 23,000: Reuters