October 21, 2019

Start your week off right with our market snapshot and data visualization from the Global Investment Strategy team.

WHAT HAPPENED

• Global stocks advanced 0.8% in the latest week (1.0% MTD) led by a 1.3% rise in emerging markets (2.4% MTD) followed by 0.7% in developed markets (0.8% MTD).
• In the U.S., the S&P 500 delivered a 0.6% return (0.4% MTD), the NASDAQ increased 0.4% (1.2% MTD), and the Russell 2000 climbed 1.6% (0.8% MTD).
• Longer term sovereign interest rates across developed economies advanced modestly with the 10-year U.S. Treasury gaining 2 bp to 1.75% and 6 bp for the 30-year Treasury to 2.25%.
• U.S. high yield corporate credit spreads tightened but are still 10 bp higher MTD.
• The U.S. majors dollar index fell -1.0% and is -2.1% in October.
• S&P 500 Q3 earnings are expected to decline -4.8% y/y after falling -0.4% y/y in Q2. Twenty percent of the market cap weighted S&P 500 has reported results.
• U.S. retail sales fell -0.3% m/m for the first contraction in seven months in September. On a year over year basis, retail sales grew 4.1% and remain near the highest rate in 2019. A continuation of U.S. consumer strength is key both to the U.S. and global outlook.
• U.S. industrial production declined -0.1% y/y in September, the first contraction in two years. Growth has steadily declined from a multi-year peak of 5.4% in September 2018 highlighting the persistence of the manufacturing slowdown.
• U.S. capacity utilization fell -0.4% m/m to 77.5% and is near the lowest in two years. Utilization has declined ~2.0% over the last year and from the highest since mid-2008. Lower resource utilization further reinforces the likelihood of limited inflation upside.
• The U.S. Conference Board leading economic indicator index expanded only 0.4% y/y in September and is near the lowest in 10-years. The index has fallen sharply over the last year after reaching 6.6% y/y in September 2018 and suggests GDP growth will remain modest over the next 12-months.
• The British parliament delayed a vote on a Brexit deal agreed to by the EU and Prime Minister Boris Johnson by three months over the weekend.
• China’s Q3 GDP missed estimates (6.1% y/y) and fell 0.2% from Q2 to 6.0% y/y, the worst since 1992. China’s slowing and worse than expected growth highlights the extent of the global slowdown and the negative impact of the trade war.
• China trade was worse than expected in September. Exports declined -3.2% y/y and imports were lower by -8.5% y/y. Exports to the U.S are down 22% year over year.

WHAT'S AHEAD

• U.S. Existing Home Sales (Tuesday)
• European Central Bank Meeting (Thursday)
• Eurozone Markit Manufacturing and Services PMI (Thursday)
• U.S. Durable Goods Orders (Thursday)
• U.S. Markit Manufacturing and Services PMI (Thursday)
• U.S. New Home Sales (Thursday)