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Investment Review/Outlook

Market Highlights


  • September consumer confidence rose to 81.2, as the economy improved
  • Retail sales rose 1.9% in September, with auto sales up to 16.3 million units, above estimates
  • Non-farm payrolls in September increased 661 thousand, below estimates of 859 thousand
  • Unemployment fell to 7.9%, with underemployment falling to 12.8%
  • U.S. industrial production fell -0.6%, following an increase of 0.4% in August
  • Housing prices are up 8% on a year-over-year basis, with a drop in supply to 3.3 months
  • New home construction numbers were 1.4 million in September, the highest number in 13 years
  • Existing home sales rose to an annual rate of 6.0 million in August
  • U.S. manufacturing expansion is picking up, with September ISM at 55.4, but below estimates
  • Personal income was down -2.7% and consumer spending was up 1.0% in August
  • GDP for Q2 was down -31.4%, with Coronavirus, and is expected to be up 33.0% in Q3


  • September core inflation was 1.4% for CPI and 0.4% for PPI on a year-over-year basis
  • Crude oil fell to $40.2, but demand is coming back as we reopen the economy
  • Deflation has been the worry for some time, but long term inflation remains concerning

Monetary Policy

  • The Fed cut the Fed Funds rate to 0.0% and kept the Discount rate at 0.25%
  • The Fed changed its inflation target to an average of 2% to avoid deflation
  • World Central Banks continue to cut rates and add liquidity by purchasing bonds and ETFs
  • The Fed said they will not raise interest rates until 2023 to give visibility to businesses


  • The Coronavirus has killed more than 1 million people with 40 million infected
  • Worldwide debt has grown to some $258 trillion, according to the Institute of International Finance
  • China's growth picks up, as they open up their economy and a second wave hit the rest of the world
  • World sentiment turns against China for health, military, intellectual property, and human rights reasons

Interest Rates

  • Ten-year Treasury yields rose from 0.50% to a high 0.75% and stand at 0.68%
  • Libor, the inter-bank lending standard, is 0.27%, and is set to be phased out in 2020
  • Mortgage rates fell, as the 30-year fixed rate came down to 2.8%
  • Yields on $17 trillion of worldwide debt is negative, with Japan 10yr -0.09%, Germany 10yr -0.59%


  • Reported corporate earnings are beating estimates 86% of the time and revenues are beating 82%
  • Third quarter results are down -18.1% from a year ago, this is the 2nd largest decline since 2009
  • Markets are projecting positive year over year growth in 2021 and beyond
  • Market Outlook

    • S&P 500 pulled back 10% in September, but remains in a secular bull market
    • Market volatility spiked in September to 38 and has settled back under 29
    • Consumer discretionary, materials, and industrials were the best performing groups
    • The S&P 500 is trading at 21 times forward earnings, above its 25-year average

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