What I Think I Learned Last Week #13: En musique !
We are the World: The MSCI’s 47-country ‘All World’ index set a record twelfth straight month of gains (in dollar terms), surpassing its 11 months of gains in 2003.
What about America? For October, the Dow gained 4.3%, the S&P rose 2.2% and the Nasdaq gained 3.6% – the best monthly performance for each index since February That marks seven straight months of gains for the Dow and S&P 500 and four straight months of gains for the Nasdaq.
Party in the USA: US personal spending rose the most in eight years last month and the Chicago PMI hit its highest level in six years. Additionally, confidence among US consumers in October rose to its highest level in nearly 17 years, according to data from The Conference Board.
17 Forever: Meanwhile, the US jobless rate is at its lowest in 17 years, dropping to 4.1%.
Only 16: Economic confidence in the eurozone surged to its highest level in sixteen years this month. Separately, unemployment fell to 8.9%, the lowest since 2009.
Proud to be an American: Wall Street Journal compared Central Banks’ balance sheets as a percentage of GDP. The ECB and Bank of Japan are both at 39%; the US Fed is at 23%. That tells me that the US is in a much better place when it comes to a sustainable monetary policy.
Beat It: Merrill Lynch says that with about 70% of the S&P 500 having reported, the index is on track for the biggest sales beat in three years with the strongest guidance trends in seven years.
You Can’t Stop the Beat: HSBC looked at the global third quarter earnings season and said the US looks to be leading the way with over 80% beats, versus just 61% in Europe, which is a large decline for Europe from levels earlier this year. HSBC went on to say that the gap between US and Europe is even bigger when looking at analyst earnings revisions, as the US revision ratio is comfortably above 50%, signaling more upgrades than downgrades, whereas in Europe the ratio drops to just 45%.
Waiting for the World to Change: Inflation around the world remains below target. The Bank of Japan cut its inflation forecast for fiscal 2017 from 1.1% to 0.8% and from 1.5% to 1.4% for fiscal 2018. Inflation in Germany slowed to 1.5% in October, down from 1.8% in September and below economists’ expectations.
More Changes: S&P Dow Jones and MSCI announced in July that they are seeking investor commentary on their proposed changes to the telecom sector, including renaming it “communications services” and expanding it to include three industry groups: telecommunication services, media and entertainment, and consumer internet and digital services. The proposal suggests that social-media and search-engine companies, like Facebook and Alphabet, could be moved out of the technology sector to this new group.
No Change, for now: The Fed left rates unchanged but described economic activity as “rising at a solid rate despite hurricane-related disruptions”, a clear upgrade from “rising moderately” in the prior statement. This is, for all practical purposes, announcing a rate hike is coming at the December meeting.
Meet the new boss, same as the old boss: Meanwhile Jerome Powell was named to succeed Janet Yellen as head of the Fed. His choice was touted as a choice of continuity in policy.
It’s been a long time: The Bank of England has increased interest rates for the first time in a decade, raising its benchmark by a quarter of a percentage point to 0.5 %.
Money for Nothing: Global funds see inflows during the week ended November 1, but Europe suffered net redemptions. Global and Japan funds each saw more than US$3.0 billion of inflows. European funds, however, suffered US$532 million of outflows.
Working for a living: US worker productivity in the third quarter climbed by the most in three years by increasing at an annualized 3%, beating expectations of 2.4%.
Amazon Untamed: Scott Galloway, a marketing professor at New York University and author of « The Four: the Hidden DNA of Amazon, Apple, Face-book and Google » says that last year, 55% of product searches began on Amazon, topping Google.
It’s as easy as ABC, 1,2,3: Amazon has registered three new domain names related to cryptocurrency, sparking speculation that the e-commerce giant may accept it as payments or even move into the space. They include: amazonethereum.com, amazoncryptocurrency.com and amazoncryptocurrencies.com. The company already signed up for the domain « amazonbitcoin.com » three years ago, and the address takes you straight to Amazon.com.
What about Our House? It is getting more expensive. The Case-Shiller national housing index shows US house prices rising at 6.1%, more than twice the rate of wage growth.
Commitment: Goldman Sachs CEO on using Twitter instead of press releases: “If I had 1,000 words it would be bland, but in 140 characters your character comes through and you are forced to commit,” Mr Blankfein observes. “It’s a risky thing, but being forced to commit is good.” Being forced to commit is good for investment returns, too. #ConvictionInvesting
Halloween is big business: More than 179 million Americans were expected to celebrate Halloween this year, spending about $9.1 billion on costumes, candy and parties, according to the National Retail Federation. That is the highest level since they started tracking Halloween spending 12 years ago. Not even a terrorist attack just hours before could stop New Yorkers from celebrating with their Halloween Parade.