Equities ex-US posted the strongest increases last week for the major asset classes, based on a set of exchange traded funds. But on Monday morning that rally suddenly looks like ancient history after the attacks on oil-production facilities in Saudi Arabia over the weekend.

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Oil prices surge after attack on Saudi oil facilities: Reuters
US economy is relatively immune to blowback from Saudi oil attack: WSJ
Trump: US ‘locked and loaded’ after attack on Saudi oil supply: CNBC
United Auto Workers union goes on strike against GM: CNN
China’s economic growth continued to decelerate in August: Bloomberg
Johnson to tell European Commission UK won’t delay Oct 31 Brexit: BBC
Incoming ECB chief will likely maintain ultra-loose policy: Bloomberg
Import prices for US fell sharply in August: MW
US consumer sentiment rebounded moderately in September: UoM
US retail sales edged up to +4.1% annual pace in August: CNBC

● The Case For People’s Quantitative Easing
By Frances Coppola
Review via Brave New Europe
The thesis behind the book is that, although quantitative easing since the Great Financial Crisis of 2007/8 has failed, the cause of failure was its implementation, not the policy itself. Quantitative easing was a policy proposed by Milton Friedman and Ann Schwartz back in 1963 as a way to counter a financial depression, or “Great Contraction” as they termed it. The idea was to radically increase the money supply, providing consumers with money to resuscitate the economy. Five years later Friedman used the metaphor of a helicopter dropping money over communities to achieve this goal. He emphasised that it had to be a one-off event to discourage people from saving it, thinking there was more to come. Following the Great Financial Crisis, central banks worldwide initiated Friedman’s policy of helicopter money, dispensing trillions of dollars. However, as Coppola explains, this massive use of quantitative easing, or the “Great Experiment”, failed because” Friedman’s “‘helicopter drop” came to mean not putting money into people’s pockets, but rather casting money blindly onto international financial markets without regard to where it would end up. The desired result did not happen; instead we find ourselves in the “Long Stagnation”.
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Just when it looked like inflation’s threat was fading, yesterday’s August report on consumer prices dispensed a not-so-fast alert. The core reading of the Consumer Price Index (CPI), which excludes food and energy, rose 0.3% last month and accelerated to a 2.4% annual pace – the highest in 11 years. One data point isn’t a trend, of course. But yesterday’s release is conspicuous at a time when the US economy is struggling with slow growth and expectations that interest rates are headed lower, perhaps turning negative at some point.

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Biden attacks Warren, Sanders over price tag of healthcare plans: Reuters
ECB rolls out new stimulus plan to fight Europe’s economic slowdown CNBC
China expands exemptions to US goods subject to tariffs: Bloomberg
Trump: an interim trade deal with China is a possibility: CNBC
US budget deficit rises above $1 trillion for first time in 7 years: WSJ
Is the US facing a recession or slow growth? NY Times
US jobless claims fell to 5-month low last week: MW
US core consumer inflation’s annual pace accelerated to 11yr high in Aug: CNBC

Risk management has become a high priority for many investors over the past decade. The worst financial crisis and recession since the Great Depression in 2008-2009 clearly has the power to focus minds. Research shops have moved heaven and earth to search for solutions that attempt to limit risk without sacrificing return. The question is whether simplicity is competitive in this quest? As a preliminary investigation, consider a humble strategy that toggles back and forth between two BlackRock asset allocation ETFs.
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Trump delays China tariffs ahead of trade talks: BBC
Supreme Court OKs new asylum restrictions: CNN
European Central Bank expected to roll out new stimulus plan: CNBC
A new refugee crisis for Europe may be lurking: NY Times
US exported more oil than Saudi Arabia in June: Bloomberg
US wholesale inflation ticked up to relatively subdued +1.8% in Aug: MW
Eurozone industrial output fell more than expected in July: FT

Economic growth has slowed and there’s no sign that output will reaccelerate any time soon. But there’s also minimal evidence that the economy is due to crumble in next month’s third-quarter GDP report. Instead, the macro trend continues to plod along at a subdued pace.

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Trump abruptly fires Bolton, national security adviser: The Hill
No change in median US household income in 2018: WSJ
China exempts tariffs on select list of US goods: Axios
Some US firms cancelling China investments at faster rate: CNBC
California passes bill to require contractors be treated as employees: NY Times
US small business optimism still upbeat in Aug, but outlook looks challenged: NFIB
US job openings remain elevated but continue to trend lower in July: CNBC

The world economy appears to be slowing, with some analysts warning that recession risk is rising. Judging by year-to-date equity performances for the planet’s main economic regions, however, suggests that the crowd isn’t particularly worried.

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