By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Investors have a busy week this week with the U.S. Federal Reserve (Fed) expected to end its two-day meeting on Wednesday by announcing no change in interest rates. We expect the Fed to maintain its tightening bias but reiterate that the recent tightening in financial conditions (higher bond yields, strengthening U.S. currency, and weaker stocks) is replacing the need for additional interest rate increases for the time being. Futures continue to indicate that the market believes the Fed is finished tightening, but we believe the Fed will stress that it remains data-dependent.
- There are multiple data releases this week, with a focus on the jobs market. On Friday (after the Fed meeting) the U.S. Bureau of Labor Statistics will release the employment report for October. Nonfarm payrolls are expected to increase 190,000, with the unemployment rate remaining steady at 3.8%. Prior to the Federal Open Market Committee meeting, the Fed will get data points from the labor market from the third-quarter employment cost index; the September Job Openings and Labor Turnover Survey, or JOLTS, data; and the ADP employment report. The strong labor market and strong consumer spending have been two of the notable bright spots for the economy.
- On Wednesday morning, prior to the Fed announcement, the ISM manufacturing survey for October will be released. It is expected at 49, which would represent the 12th consecutive month of contraction (a reading below 50). While manufacturing is a smaller part of the economy (12% of total output and 8.5% of the workforce), it is an important sector, and the data is consistent with a manufacturing recession. Current levels of the ISM survey are also historically consistent with Fed easing.
Three Things to Know
- According to the National Retail Federation, 73% of people plan on celebrating Halloween, and per-person spending is expected to be $108.24. That includes spending on costumes, candy and decorations, and total spending is expected to be $12.2 billion. All three of those figures are records and reflect the fact that Halloween is the second-highest grossing commercial holiday after Christmas. (Source: The National Retail Federation)
- Daylight saving (not savings) time will end on Sunday, November 5 at 2 a.m. this year. When daylight saving time was extended in 2007, there was a 7% decrease in crime in the U.S., although car accidents increase in the weeks following the beginning of daylight saving time. In September 1999, daylight saving time helped prevent a terrorist bombing. When West Bank terrorists failed to realize that Israel had switched back to standard time, their bombs exploded an hour too early—killing three terrorists instead of the intended victims. (Source: www.factretriever.com)
- October 29, 1929, better known in the history books as “Black Tuesday,” followed closely on the heels of Black Thursday, not even a week before. Black Thursday, or October 24, 1929, was a day of panic in the market as the Dow Jones Industrial Average shed approximately 11% of its value. Despite efforts to glue the market back together in a hurry, it fell further off the cliff the following Tuesday as the Dow plummeted another 12%, leading to a total collapse. (Source: Bespoke)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.