Last Week:

Market volatility continues. Wall Street guru Mohamed El-Erian coined the phrase “the new normal” back in 2009. It meant the U.S. would sustain slower economic growth, and during the Obama years GDP grew about +2%. But our GDP four quarter rolling average is now over +3%. El-Erian predicted last week we would see this +3% growth thru 2019 and 2020. One economist recently said the current volatility is more like heartburn than a heart attack.

The focus of the latest Fed minutes was on their interest rate forecast. A key fact is that the vote to raise their interest rate from +1.75 up to +2.0% was unanimous (9-0). Yes, the Fed addressed emerging market economies, trade tensions between the U.S. and China, and the impact of Hurricane Florence. But the focus and take-aways were all about interest rates. Their next meeting starts the day after the Mid-term elections. And hopefully the Fed will clarify what a “neutral” interest rate is.   

This Week:

The economic focus of the week: Lotto fever. The current Mega jackpot is a record tying $1.6 billion. If your ticket hits, say you give 10% away and pay your taxes, the take home amount would be around $425 million (Yikes!). Power is at a paltry $620 million.

Friday morning we will get the first read on Q3 GDP. Q2 finished at +4.2%. The range for Q3 is between +2.6% to +3.8%. Expectations are for +3.3%.

The latest Beige Book gets released on Wednesday afternoon. The Fed divides the U.S. into 12 districts, and this will be the seventh (of eight) report this year.

Earnings season continues. Some of the companies reporting this week: 3M, Alphabet, Amazon, AT&T, Boeing, Caterpillar, First Energy, Ford, Harley-Davidson, Goodyear, Hershey, Intel, Kimberly Clark, Lincoln Electric, McDonald’s, Merck, Microsoft, PolyOne, Sherwin Williams, Twitter, Verizon, Visa, and Whirlpool (NE Ohio companies bolded).

Indicator focus:  September’s new home sales, latest Beige Book (Wed); September’s durable goods orders and international trade (Thu); and the first read on Q3 GDP (Fri).

Hope you have a great week.


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