Congress reached a deal to avert a government shutdown over the weekend, for now. Check back in a month to see if we’re here again. It’s a 45-day stop gap. So, now bears can focus on strikes, student loan payments resuming, and rising bond yields. So, with money flowing, we’ll get the Jobs Report and the CPI (Oct 12) this month, which investors will look to as signs for the next central bank move (or pause).
CFO economic confidence rose in the latest Duke survey despite major concerns about monetary policy. It was conducted August 21 to September 8. The improvement represents a recovery from extremely low levels in 2022 more akin to those during the pandemic. Expectations for revenues and employment were both much stronger for 2024 than for 2023. So, is that a sign for 3Q23 earnings reports? And will they dare talk about it in their Q&A?
RBC often has some interesting tidbits to share. They note that inflows have nearly disappeared from China, Japan, and EM equity funds but remain positive for US equity funds, mostly due to large cap passive funds. Also, they note that the companies that have talked the most about AI this year underperformed sharply in September but stabilized a bit at the end of the month. And they pointed out that utilities gave back all of the outperformance earned in early September in the final week of the month due to the jump in yields.
GS believes that US tech stocks may rebound, per Bloomberg. But UBS notes that the ave session range for the S&P 500 last week was at its greatest width in 5 weeks, and Miles Driven is at a peak since May, which even with rebalancing, is not a sign of strength. They estimate the forward multiple of the S&P is at 18.0X—better than the spring but still not cheap.
The VIX is headed for a record amid uncertainty over where the economy and rates are going, per the FT. CTAs have taken some money off the table.
The ECB dismisses rates cuts because returning to 2% will be tough, per the FT. The BoE had to do its job, I guess, and warned banks not to underestimate the impact of higher rates, per the London Times. They should have provided the tel numbers of First Republic and Silicon Valley Bank’s top executives as well.
If you’re also short Treasuries, watch out.
There’s a lot less of it.
The ISM was better than expected, so hopes for a soft landing just got a data point to back up that hope. It rose to 49, its highest reading since November 2022. New orders remain below 50 at 49.2, but also recovered more than expected and hit the highest reading since August of last year.
