Maybe. Depending on the selection of indexes, fund products, and time periods, you can find almost anything you want. Data mining issues aside, the notion of what’s often called the “sweet spot” in the capitalization spectrum persists, albeit in fits and starts. A popular explanation is that the middle slice of the capitalization spectrum merges the best attributes of small caps and large caps while minimizing the drawbacks. The implication: you should carve out a dedicated mid-cap allocation. Perhaps, but like every other risk premium the mid-cap variety waxes and wanes.
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● Fed leaves rate unchange, dhints at December hike | Reuters
● US trade gap drops to 7-month low in September | Bloomberg
● Inventories expected to weigh on today’s GDP report | Reuters
● US trucking growth has been weak this fall, according to execs | MNI
● German jobless rate ticks lower in September | Reuters
● Japan’s industrial output delivers upside surprise for Sep | Bloomberg

Expectations are in need of a haircut for tomorrow’s preliminary release of the government’s third-quarter US GDP report, according to yesterday’s update of the Atlanta Fed’s unofficial estimate. In contrast with Econoday.com’s consensus forecast for a 1.7% rise in Q3 output, yesterday’s update of the unofficial GDPNow model forecast sees Q3 growth at a tepid 0.8%, down a tick from the bank’s Oct. 20 nowcast of 0.9% and far below Q2’s strong 3.9% rise.
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Economists expect no change in interest rates today when the Fed publishes its monetary policy statement at 2:00pm eastern. Briefing.com’s consensus forecast calls for Fed funds to remain at the zero-to-0.25% target rate that’s prevailed since 2008. Surprising? Not really, courtesy of the recent run of wobbly economic data. Does market data agree? Oh, yeah. The numbers speak loud and clear. If Yellen and company announce a rate hike later today, it’s going to be a major surprise by Mr. Market’s reckoning, as we’ll see in the following tour of the numbers.
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● US durable goods orders continue to fall in September | USA Today
● US business investment is also weak in September | Bloomberg
● US house prices up 5.1% YoY in August | CNBC
● UK Q3 GDP growth slows more than expected | Reuters
● Conference Board’s US Consumer Confidence Index falls In Oct | MarketWatch
● Richmond Fed index: mfg contraction eases in Oct | DJ

US economic output is widely expected to post substantially slower growth in the government’s preliminary estimate of third-quarter GDP that’s scheduled for release this Thursday (Oct. 29). Exactly how much deceleration we’ll see vs. Q2’s strong 3.9% rise (real seasonally adjusted annual rate) is a matter of some debate. Indeed, the projections vary from tepid expectations that border on stall-speed assumptions up to a moderate pace that’s still worrisome but strong enough to fend off the view that a new recession is near.
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● US new home sales fall in Sep, close to 1-yr low | Reuters
● Dallas Fed Index: mfg activity revives as gen’l index stays negative | 24/7 Wall St
● US warship sails through disputed waters in South China Sea | CNN
● Fed debates at center of policy focus this week | Bloomberg
● White House & Congress reach budget deal | WaPo

US stocks reclaimed the top spot in last week’s performance race for the major assets classes, based on a set of proxy ETFs. The Vanguard Total Stock Market ETF (VTI) gained 1.7% for the five trading days through Oct. 23, the fourth straight weekly rise—the longest winning streak in a year. Otherwise, the week just passed was mixed for the major asset classes, with broadly defined commodities—iPath Bloomberg Commodity (DJP)—leading the losers with a 2.7% loss—the biggest weekly slide since August.
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● US Manufacturing PMI rises to 5-month high in Oct | MarketWatch
● Ifo business climate data for Germany edges up in Oct | Ifo
● China cuts policy rate–a warning sign for global economy? | The Guardian
● Japan still struggling after years of monetary stimulus | NY Times
● Russia’s operations near US undersea cables looks suspicious | Reuters
● ECB’s Draghi looking for clues this week about stimulus plan | Bloomberg

● America’s Bank: The Epic Struggle to Create the Federal Reserve
By Roger Lowenstein
Essay by author via The Wall Street Journal
Antipathy to the central bank is a uniquely American tradition. No federal agency, except the Internal Revenue Service, is held in lower regard than the Federal Reserve, according to public opinion surveys. The left accuses the Fed of being too cozy with banks; the right says it is planting the seeds of a massive inflation.
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