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.
Continue reading →

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.
Continue reading →

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

The Sep. 17 edition of The US Business Cycle Risk Report has been published and emailed to subscribers.

● Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power
By Meghan L. O’Sullivan
Summary via publisher (Simon & Schuster)
Windfall is the boldest profile of the world’s energy resources since Daniel Yergin’s The Quest. Harvard professor and former Washington policymaker Meghan L. O’Sullivan reveals how fears of energy scarcity have given way to the reality of energy abundance. This abundance is transforming the geo-political order and boosting American power. As a new administration focuses on raising American energy production, O’Sullivan’s Windfall describes how new energy realities have profoundly affected the world of international relations and security. New technologies led to oversupplied oil markets and an emerging natural gas glut. This did more than drive down prices. It changed the structure of markets and altered the way many countries wield power and influence.
Continue reading →

Asset Allocation in a Low Yield Environment
John Huss (AQR Capital Mgt.), et al.
August 17, 2017
The year 2016 saw bond yields fall to unprecedented low levels in major developed markets, with nominal yields on 10-year German and Japanese government bonds even turning negative. While yields have risen off their lows in 2017, we are still in a very low rate environment. Does this demand exceptional action from investors – even those who usually maintain a strategic allocation to global bonds? We find that it does not, instead it highlights the importance of diversification across many return sources.
Continue reading →

N. Korea fires second missile over Japan: NY Times
US annual consumer inflation ticks up to 1.9% in August: BLS
US jobless claims drop sharply after previous week’s rise: Bloomberg
Revised US Q3 GDP growth estimate holds steady at 3.2%: Now-casting.com
US Consumer Comfort Index dips for second week: Bloomberg
Ross says N. Korea problem won’t stop US trade reform with China: Politico
US 2-year Treasury yield rises to highest since July: MarketWatch

The S&P 500 Index edged up to another record high yesterday (Sep. 13), providing another reason to wonder: How long can this last? Mere mortals are clueless, but in the search for some historical perspective it’s reasonable to consider how the current bull run stacks up against its predecessors.
Continue reading →