Summary
The Fed is Speaking This week is dominated by FedSpeak and the latest developments from the U.S. government shutdown. Last week, the Dow Jones Industrial Average and the S&P 500 were up about 1%, and the Nasdaq was up about 1.3%. So far this year, the Dow is up about 10%, the S&P 500 14%, and the Nasdaq about 18%. On the economic calendar, Federal Reserve officials will be active on the speaking circuit. About 10 officials have public engagements, including Chairman Jerome Powell, who will give a pre-recorded address at the Community Bank Conference in Washington, DC on Thursday. In addition, the FOMC minutes from the last rate meeting will be released on Wednesday. Turning to other data, the Atlanta Fed GDPNow measure now forecasts GDP of 3.8% in the third quarter. That is above last week’s forecast. The Cleveland Fed Inflation Nowcast calls for CPI of 2.9% in October, even with the September pace. Mortgage rates inched higher last week, with the average 30-year fixed-rate mortgage now at 6.34%, according to FreddieMac. Gas prices dropped a nickel to an average of $3.12 per gallon for regular gas. Looking ahead, put a red mark on Tuesday, October 14. That’s when the big banks kick off the next earnings season. The next Federal Reserve interest-rate decision comes on October 29. Odds are at 97% for another 25-basis-point rate cut, according to the CME FedWatch rate tool. After that, the last meeting of the year is on December 10, when odds are at 87% for a third 25-basis-point cut. Taking a deeper dive into performance, U.S. stocks are lagging global stocks. A leading industrialized global stock market index, the ETF EFA, has surged 26% year to date, while the leading emerging market ETF EEM has gained 29%. U.S. growth stocks, with a year-to-date gain of 16% (ETF IWF), have taken the edge over value stocks (ETF IWD), which have booked an advance of 11%. In other asset classes for the year to date, AGG
