SIGNS OF STRENGTH
Retail sales in September exceeded expectations by increasing 0.4%, beating the projected 0.3% rise. This marked a significant improvement from August’s 0.1% growth. The stronger-than-expected retail sales data for September suggests robust consumer spending, potentially signaling a positive outlook for economic growth. This uptick in retail sales could be reflective of consumer confidence and could have positive implications for businesses in various sectors, indicating a potential boost in economic activity. This positive performance in retail sales may influence future market trends and consumer sentiment, highlighting the resilience of the retail sector amid ongoing economic fluctuations.
ROLLERCOASTER RIDE
U.S. jobless claims declined by 19,000 to 241,000 in the week ending on October 12, marking the biggest drop in three months. This decrease followed a surge in claims the previous week, which was primarily caused by disruptions from Hurricanes Helene and Milton. Nevertheless, it is important to remark that although the improvement can be seen as a positive development, the number remains above the levels seen earlier this year, and this could be signaling a softer labor market compared to its post-pandemic peak. Meanwhile, the total number of outstanding claims increased by 9,000 to reach 1,867,000, while the four-week moving average, which smooths out weekly fluctuations, rose slightly to 236,250. Additionally, non-seasonally adjusted claims also decreased by 11,416 to 224,763, with Michigan and Florida experiencing notable reductions likely attributable to hurricane-related recoveries.
NEW FUND FUSION
Quantify Funds has introduced the STKD Bitcoin & Gold ETF (BTGD) aiming to offer investors a unique way to access both bitcoin and gold markets. By investing in bitcoin and gold futures contracts along with exchange-traded products, the fund seeks to provide 100% exposure to each asset for every $1 invested. To achieve this, BTGD uses leverage to double the investment amount, and although it does not directly holding bitcoin or gold, the fund uses reverse repurchase agreements for additional investment opportunities. Managed by Tidal Investments and Quantify Chaos Advisors, the fund’s strategy involves managing risks associated with price volatility, regulatory uncertainties, and potential security issues, while also aiming to capitalize on the recent positive performance of both bitcoin and gold markets.
MARKET MANIA
The investment firm, Stifel, has raised concerns about the current state of the S&P 500, suggesting that we may be in the midst of another market “mania” with the potential for a significant drop in the benchmark index next year. This is driven by elevated valuations that have pushed the benchmark index to record highs on the back of positive economic conditions, rate cut expectations, and excitement surrounding artificial intelligence. Stifel draws comparisons to previous market bubbles, such as the dot-com bubble and historic stock run-ups, suggesting that the current market environment resembles those leading up to significant crashes. In fact, they foresee a possible sharp decline in the S&P 500 next year (around $4750) if the index follows the pattern of previous manias. Nevertheless, it is worth noting that although other Wall Street forecasters also express concerns about overvaluation, investors remain optimistic about the stock market outlook, largely due to expectations of continued rate cuts by the Federal Reserve. Yet, caution is advised as potential rate cuts and inflation uncertainties could potentially pose challenges in the coming years.
INTERNATIONAL NEWS
The European Central Bank announced a reduction in its key interest rate to 3.25%, marking the third rate cut this year. This move was widely anticipated as there are current concerns about inflation and slow economic growth. As for the latest economic indicators, they have shown that prices have been increasing more slowly than desired in the Eurozone, causing the ECB to predict a temporary rise in inflation before it returns to target levels next year. Thus, the decision to lower rates reflects a change in expectations for more aggressive measures to boost the economy. Challenges in the Eurozone include weaker demand and economic uncertainties in countries like Germany and France, as well as ongoing efforts to manage budgets. Nonetheless, it is worth noting that the ECB’s president, Christine Lagarde, has expressed optimism about the inflation outlook, which has helped build confidence in the bank’s ability to meet its goals in a tough economic climate.
