It Doesn’t Matter That Your Neighbor Thinks the “Markets” Are Expensive
Weekly Commentary, October 6th, 2017
- Equity markets were mixed this week with US equities (S&P 500) up 1.24% and international equities (EAFE) down -0.09%
- Fixed income markets were also mixed with investment grade bonds (AGG) down -0.06% and high yield bonds (JNK) up 0.21%.
- Fed Outlook – This week many Federal Reserve President’s spoke in various capacities on the outlook for future policy decisions. Bank of San Francisco President John Williams stated that “favorable employment numbers, combined with the findings on inflation and the steady pace of growth, are all behind my confidence that rates will need to rise to their new normal levels”. Furthermore Philadelphia President Patrick Harker stated that he has “penciled in” a rate hike in December and three hikes next year. Fed officials continue to weigh disappointing inflation data, but consensus at this point seems to point to a rate hike in December.
- Catalonia Independence – the region’s Parliament will meet Monday to decide whether to ignore the independence referendum results (80% approval, but the opposition largely boycotted the vote), or attempt to move forward. Importantly, the EU has stated Catalonia would not be admitted to the EU, but could file to be included which is a process that takes 10 years. Spain’s equity markets were down a bit this week, but more importantly their bond market was stable.
- Commentary: Facts not one’s feelings move markets. We take a quick look at the misguided feelings parading around these days in the form of prognostications and the actual facts moving markets. I’ve included a must-read piece by Brian Wesbury as a reminder to us all, of perhaps the most important investing fact—markets are very resilient. So much so that they eventually overcome even negative facts that investors would understandably assume would keep markets down.
To read the full commentary, click below!