On Friday, the Commodity Futures Trading Commission (CFTC) approved bitcoin futures trading on the Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE). Bitcoin has risen by a factor of ten since the start of the year.
With the Federal Reserve hiking and US rates on the rise, there’s never been a better time to reposition into global bonds as your core mandate. But when you do, it’s crucial to fully hedge against currency risk.
Goldilocks is going back for thirds. The beneficent global economic regime we’ve described for the past several months remains solidly in place – global economic growth (especially in manufacturing), strong corporate earnings and revenues, raging equity markets, low interest rates, and an almost frightening level of market complacency.
The business cycle is one of the most important drivers of investment performance. As the nearby chart shows, recessions lead to outsized moves across asset markets. It is therefore critical for investors to have a well-informed view on the business cycle so portfolio allocations can be adjusted accordingly.
Nothing causes more anger, confusion, and bewilderment than the trade deficit – that is, except for the federal budget deficit. In past decades, these were often called “the twin deficits.” They are not identical, but they are related.
Economists view the growth in labor productivity, or output per worker, as the single most important variable in an economy. It’s what lifts the standard of living, helps keep prices low, reduces government budget strains, and drives corporate profits. Over the next few decades, achieving faster productivity growth will be key as labor force growth slows. The outlook is encouraging, but uncertain.
As expected, nonfarm payrolls rebounded from hurricane-related effects. The unemployment rate edged lower, but that may have been noise. Leisure and hospitality was the sector most affected by Hurricane Irma, which might explain the choppiness in average hourly earnings (up 0.5% in September, flat in October).
The “Goldilocks” regime we described last month remains solidly in place – global economic growth (especially in manufacturing), strong corporate earnings and revenues, raging equity markets, low interest rates, and an almost frightening level of market complacency.
The economy grew at a 3.0% annual rate in the advance estimate for the third quarter, as the hurricanes appeared to have both positive and negative effects. The figures will be revised, but the story is unlikely to change much.
The Bureau of Economic Analysis will report its advance estimate of 3Q17 GDP growth on Friday. The figures will be revised, but investors should be aware that hurricane effects are likely to distort many of the GDP components.