Another month, another bullish tailwind for most of the major asset classes. Nearly every corner of the global markets gained ground in August, led once again by stocks in emerging markets. The only losers last month: US junk bonds and real estate investment trusts (REITs), which posted fractional declines. Otherwise, performance was broadly positive.
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ADP’s stronger-than-expected gain in US private employment for August hints at the possibility that the downshift in the labor market’s annual growth rate over the past two years is steadying. If so, we may see some corroboration in tomorrow’s update on payrolls from the Labor Dept.
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Demand for safe-haven Treasuries kicked into high gear yesterday, which cut the benchmark 10-year Treasury yield down to its lowest level in nearly ten months. What’s driving this key rate down? A combination of factors, ranging from renewed market jitters over the latest missile test by North Korea to concerns that Hurricane Harvey will take a toll on US economic growth to a weak run of inflation in 2017.
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Hurricane Harvey has dealt a devastating blow to the Houston region, which was recently on track to account for 2.4% of the nation’s economy this year. The blowback for the US overall, however, is expected to be mild, more or less leaving the latest estimates for a pickup in economic activity for the third quarter intact, at least for now.
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Global markets posted gains in every broad category last week, based on a set of exchange-traded products. Leading the field higher: stocks in emerging markets, closely followed US real estate investment trusts (REITs).
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The Aug. 27 edition for The US Business Cycle Risk Report has been published and emailed to subscribers. Today’s issue adds a new feature: a summary of GDP estimates for the next quarterly report, based on several sources and methodologies. For subscription information and a recent sample, visit:

www.capitalspectator.com/premium-research

● Are We Screwed?: How a New Generation is Fighting to Survive Climate Change
By Geoff Dembicki
Review via New York Journal of Books
Dembicki makes the case that millennials are capitalism’s worst nightmare because they are opting not to own cars, houses, and other material things, thanks to the philosophy of sharing resources, such as Lyft, Airbnb, and short-term rental of goods. A softening demand for cars means less of a market demand for oil, which means a much-reduced role for the petroleum industry. The “petrostate” will still have the plastics and chemical industries that rely on oil, but a huge sector of their industry is waning.
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Cliff Asness, co-founder of AQR Capital Management, has a request: “Please Stop Talking About the VIX So Much.” The popular risk metric, which tracks the implied volatility of the S&P 500, has been unusually low, at least its latest pop. Obsessing over the VIX, however, is getting under his skin.
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Focusing on one data set is always hazardous for analyzing the business cycle, but the ongoing decline in commercial and industrial (C&I) lending is drawing a crowd. The trend is worrisome, but it’s premature to draw broader conclusions for the US economy because most key indicators are still positively skewed.
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Financial and technology stocks remain the top sector performers for the trailing one-year period, based on a set of ETFs. The bullish momentum has cooled in recent weeks for these equities, but the same is true for the market generally, leaving the two sectors comfortably in the lead vs. the rest of the field.
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