A Macro View - Casting a Wider Net
Chart of the Week
- The UK and EU have struck a long-awaited new draft Brexit deal this week. According to the new deal, a legal customs border will exist between Northern Ireland and the Republic of Ireland. But in practice, the customs border will be between Great Britain and the island of Ireland, with goods being checked at the points of entry. This replaces the controversial Irish backstop plan in Theresa May's deal. However, hopes of securing a Brexit deal were dealt a major blow after Northern Ireland’s Democratic Unionist party said it could not support the revised deal as it stands.
- US Industrial production declined sharply in September. Industrial production fell 0.40% from August. This follows an upwardly revised 0.80% increase (from 0.60%) in August. US industrial production also contracted 0.10% compared with the same month last year to post its first year-over-year decline since 2016. The decline was influenced strongly by the General Motors strike and also driven by weakness in mining and lower global oil prices.
- Housing, construction, and employment data was mixed. US housing starts declined 9.40% month over month to 1.256 million units in September. Construction in the volatile multifamily housing segment dropped, but single-family home construction rose for a fourth straight month. Initial jobless claims for the week ending October 12 increased by 4,000 to 214,000. Continuing claims for the week ending October 5 decreased by 10,000 to 1.679 million.
- US equities had moderate gains this week. The market sentiment was supported by decent earnings reports and news of a draft Brexit deal, but also was dampened by some weak economic data.
- The Yield on the 10-Year US Treasury Note recovered from declines seen in the early part of the week and hovered around 1.75% for most of the week.
- Gold prices rebounded from some of the small sell-off seen in the initial days of the week, as concerns about the preliminary Brexit deal’s approval by the British Parliament and weaker-than-expected US economic data drove the price upward.
- Oil had a mixed week, as a greater-than-expected increase in the US’s stock pile amid a global slowdown drove the price down midweek. But news from the cease-fire pact in Syria and tentative Brexit deal enabled oil to regain some of the lost ground on Thursday.
- Netflix Inc. announced reported revenue of $5.25 billion, up 31% from a year ago, and earnings per share of $1.47. The streaming giant also said that it had a net addition of 6.77 million paying subscribers in its third quarter. However, the company’s projections for fourth-quarter additions were lower than analysts’ expectations.
With literally hundreds of sources of news and information at our fingertips these days, it is easy for the average investor, and many investment professionals, to be overwhelmed by all of the data and opinions they are bombarded with every day. And yet, for all the information available to the US investor, very little focuses on opportunities outside of the US, and only a fraction of that is on emerging markets.