Notes on the Week Ahead

Happy Holidays!

We wanted to wish you a happy holiday season from all of us here on the global Market Insights strategy team. Please tune in again next week for a new Notes on the week ahead.

One Sword and Three Dragons: What the Fed Should Do Next

Rudyard Kipling’s first qualification for manhood could equally be applied to the nerve required of the members of the Federal Open Market Committee, who meet this week to decide whether to hike interest rates for a fourth time this year.

A better way to forecast growth

Like the fishermen of old, many investors today are looking at relatively crude indicators such as recent market volatility or the shape of the yield curve to forecast the path for the U.S. economy and they have become worried by the behavior of both in recent weeks.

Reduced risks

The week ahead will be dominated by a reassessment of risks which, for the most part, appear to be diminishing. In particular, markets should react well to some easing in trade tensions and greater clarity on U.S. monetary policy.

Chinese-American chicken

"Hey, Toreador!" Buzz yells. "She signals. We head for the edge … and the first man who jumps is a chicken!" In 1955's "Rebel Without a Cause", the most celebrated movie in James Dean's short career, two troubled teenagers drive stolen cars through an alley of headlights and off a bluff near Los Angeles. 

Giving thanks for low inflation

This week, families and friends all over America will be sitting down together to celebrate Thanksgiving. In many homes, there is a tradition of going around the table, with each person saying what they are thankful for. In most homes, I suppose, the answers will be genuine, sometimes funny and sometimes profound. However, if at any table, prosperity is mentioned as a blessing, it should be recognized that this is, in large measure, due to low inflation.

Pay, wait or forget about it

The October unemployment rate, at 3.7%, is at its lowest level since December 1969. Continued unemployment claims last week, at 1.623 million are at their lowest since July 1973. And job openings at the end September totaled over 7 million, which, except for August, amounted to their highest level on record going back to 2000.

Cyclical implications of mid-term elections

The week ahead will be a busy one as investors process the implications of recent strong economic reports, the Federal Reserve holds its seventh FOMC meeting of the year and the nation votes in mid-term elections on Tuesday.

Grass beneath the leaves - Fundamentals still supporting

A financial nor'easter blew through global stock markets in October. Through last Friday, the S&P500 had fallen 8.7% for the month, the MSCI EAFE had declined by 9.9% and the MSCI EM had dropped by 10.3%.

Friday night lights out

Last Friday, as we often do on Fridays, my wife and I had dinner at Legal Sea Foods in the Burlington Mall and afterwards, we strolled around the mall, ice cream in hand, watching the comings and goings.