● China Mfg PMI decline falls at slightly faster rate in Sep | Markit
● Eurozone Composite PMI growth ticks lower in Sep to 53.9 | Markit
● Germany Composite PMI growth slips to 54.3 in Sep | Markit
● Richmond Fed Factory Gauge Hits 32-Month Low | IBD
● Redbook: US retail sales slow in September | Dow Jones
● Euro zone consumer confidence eases to -7.1 in September | Reuters

Tomorrow’s flash estimate of the US Manufacturing Purchasing Managers’ Index (PMI) for September is expected to tick up to a moderately positive 53.1, according to Econoday.com’s consensus forecast. Sounds good, except for one small glitch: this month’s numbers for manufacturing via three regional Fed bank indexes paint a considerably darker profile.
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The evidence is mounting that the US GDP report for the third quarter that’s due next month will reflect substantially slower growth vs. Q2’s strong 3.7% rise (seasonally adjusted annual rate). The mystery at this point is the degree of deceleration.
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● Calls for clarity on Fed’s US macro outlook | Reuters
● Atlanta Fed’s Lockhart hints at rate hike later this year | CNBC
● Bank of Canada Governor is “optimistic” about China’s outlook | MNI

Whoa, not so fast, St. Louis Fed President advised today on CNBC. Last week’s decision by the Federal Reserve to hold off on raising interest rates for the first time in nine years was widely perceived as a warning that the US economy is weakening and so tighter monetary policy isn’t on the near-term horizon. But Jim Bullard wants the crowd to dial down the revival in dovish sentiment and consider the finer points of the hawkish perspective. “There’s a powerful case to be made that it’s time to normalize interest rates,” he insists.
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Last week’s no-hike Fed decision raises questions about the outlook for the US economy, but another delay in tightening monetary policy revived demand for interest-rate sensitive assets. US real estate investment trusts (REITs) gained more than 3% for the week through Sep. 18, based on the total return for the Vanguard REIT ETF (VNQ). That’s the best weekly performance by far for the week just passed among our standard set of proxies for monitoring an the major asset classes.
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● No-hike Fed decision raises pressure for new ECB stimulus effort | Bloomberg
● Asian stocks fall on global growth concerns, but China bucks the trend | RTT
● Oil prices up on news of lower US drilling activity | Reuters
● German economy ministry expects moderate growth in Q3 | MNI

● Charlie Munger: The Complete Investor
By Tren Griffin
Q&A with author via The Wall Street Journal
WSJ: Mr. Munger has unique views on investing, particularly about the choice between index investing and what he calls “focus investing.” Do you agree with his approach?
MR. GRIFFIN: Munger says the best option for what he calls the “know-nothing investor” with a long-term time horizon is a diversified portfolio of low-cost index funds or ETFs. He also points out that despite the fact that more than 90% of investors are “know-nothing investors,” way more than 10% will conclude “I’m in the 10%.”
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The crowd is buzzing over the possibility that the Federal Reserve may be considering negative interest rates. Where did that notion come from? Well, from the horse’s mouth. As noted earlier, an unnamed FOMC member recommended—for the first time in Fed history in terms of a formal, public document—that the central bank’s policy rate be set slightly below zero for this year and in 2016, as per two dots in yesterday’s dot plot (see chart below). It’s an idea that seems to be catching on… again. The Bank of England’s Andy Haldane just outlined the case for going negative in the UK.
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Yesterday’s verdict by the Federal Reserve to leave its policy rate unchanged at the zero-to-0.25% target–a policy that’s been in place for six years–has inspired speculation that the European Central Bank (ECB) will be forced to up its game with monetary stimulus. The crowd certainly appears to be making bets in that direction–Bloomberg reports that European bond prices surged today in reaction to yesterday’s announcement in Washington. Why? Laurence Mutkin, global head of Group-of-10 rates strategy at BNP Paribas, advises that the Fed’s dovish decision has ramifications for the ECB. “We think during the fourth quarter [the ECB’s] going to announce an extension of QE,” he explains.
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