Stock markets in the Middle East and Gulf are holding on to a small performance edge over the US equity market so far in 2018, based on a set of exchange-traded funds.
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Federal Reserve raises interest rates for 3rd time in 2018: CNN
Trump criticizes Fed’s rate hike: CNBC
Fed estimates of US GDP growth for 2018 and 2019 tick higher: Fed
Fed chief sees more rate hikes ahead thanks to strong economy: Bloomberg
Kavanaugh hearing set for today amid doubts and new allegations: The Hill
Reports of higher spending plans by Italy’s gov’t weigh on euro: CNBC
Ford’s CEO says Trump’s China tariffs will cost company $1 billion: USA Today
MSCI considers raising weight for Chinese stocks in global benchmarks: Reuters
New US home sales up 12.7% in August vs. year-earlier level: MarketWatch

The Federal Reserve is on track to lift interest rates at today’s policy announcement scheduled for 2:00 pm Eastern, according to Econoday.com’s consensus forecast. The projected hike coincides with rising inflation expectations in recent weeks, based on the yield spread for nominal less inflation-indexed Treasuries.
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Senate panel vote on Kavanaugh’s Supreme Court nomination set for Fri: Politico
Arizona prosecutor to question Kavanaugh and accuser in Senate hearing: The Hill
Trump outlines ‘maximum pressure’ policy in UN speech: The Hill
China cancels scheduled US warship visit to Hong Kong: CNN
Fed on track to raise rates today and may end ‘accommodative’ policy: Reuters
S&P Corelogic Case-Shiller: growth rate of US home prices eased in July: CNBC
Richmond Fed Mfg Index rises to record high in Sepetmber: MarketWatch
Consumer Confidence Index surges in September, near record high: MarketWatch

Small-capitalization equities in the US have been on a tear this year, but investors are wondering if the headwinds in recent weeks are a sign that the strong upside momentum has run its course.
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Supreme Court nominee denies sexual misconduct charges on TV: Fox
Questions swirl about future of Deputy Attorney General Rosenstein: CNN
Trump’s lawyer calls for ‘a time out’ in Mueller probe if Rosenstein leaves: ABC
Russia plans to install advanced missiles in Syria: Axios
European Union rolls out plan to sidestep US sanctions on Iran: BBC
JP Morgan strategist: Trump risks ‘major miscalculation’ over US-China trade: MW
Dallas Fed Mfg Index: slower but still healthy growth in Sep: Dallas Fed
Chicago Fed Nat’l Activity Index (3mo avg) jumps to 4-mo high in Aug: Chicago Fed

Broadly defined commodities surged over the five trading days through Friday, September 21, posting last week’s strongest gain for the major asset classes, based on a set of exchange-traded products. Foreign stocks in developed and emerging markets accompanied the commodities rally, delivering the second- and third-highest gains, respectively.
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Kavanaugh confirmation suffers a new setback after 2nd assualt claim: Politico
US and China impose new round of trade tariffs today: CNBC
UK’s May under growing pressure to abandon Chequers Brexit plan: Guardian
Iran warns US and Israel of revenge after attack on military parade: Reuters
OPEC and allies struggle to replace Iran’s falling oil supply: Reuters
Brent oil at 4-year high after OPEC punts on raising output: Bloomberg
Does US-China trade war put US tech and telecom leadership at risk? NY Times
US Composite Output Index: growth slips to 17-mo low is September: IHS Markit

● Fighting Financial Crises: Learning from the Past
By Gary B. Gorton and Ellis W. Tallman
Summary via publisher (University of Chicago Press)
If you’ve got some money in the bank, chances are you’ve never seriously worried about not being able to withdraw it. But there was a time in the United States, an era that ended just over a hundred years ago, in which bank customers had to pay close attention to whether the banking system would remain solvent, knowing they might have to rush to retrieve their savings before the bank collapsed. During the National Banking Era (1863–1913), before the establishment of the Federal Reserve, widespread banking panics were indeed rather common. Yet these pre-Fed banking panics, as Gary B. Gorton and Ellis W. Tallman show, bear striking similarities to our recent financial crisis. In both cases, something happened to make depositors—whether individual customers or corporate investors—“act differently” and find reason to question the value of their bank debt.
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Hedging With Volatility
Mario Alagoa (Sacred Heart University)
May 9, 2018
A risk-averse investor with a long equity position is presumably interested in identifying a hedging strategy that protects the value of that investment. The common approach encompasses using either financial derivatives or holding assets (such as gold or Swiss francs) as portfolio hedges as they show negative correlation with equities. This paper proposes using volatility indexes as portfolio hedges instead; it shows that a volatility-based dynamic hedging strategy is the most effective at protecting the value of an equity investment.
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