The recent surge in US stock market volatility has rattled nerves and inspired some analysts to announce that a new bear market has arrived. The warning has resonated a bit deeper in some circles with the sight of the S&P 500 falling below its 200-day moving average earlier this month. The bearish view can’t be ruled out entirely, of course, but the latest stumble in stock prices looks like a temporary bout of anxiety rather than a start of an extended decline. Why? A key factor for this outlook is the economic trend, which continues to provide a bullish tailwind. Not surprisingly, an econometric test for bear-market signals in US stocks continues to show minimal signs of danger.
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The US economy is on track to expand at a substantially slower pace in the third quarter vs. Q2, according to The Capital Spectator’s median econometric nowcast. Today’s revised GDP estimate for this year’s July-through-September period anticipates an increase of 2.6% (real seasonally adjusted rate). That’s well below the 4.6% increase in the previous quarter, according to the Q2 report published by the Bureau of Economic Analysis (BEA) in late-September.
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● Bank stress test relief lifts European assets | Reuters
European stocks, low-rated government bonds and the single currency all rose on Monday as financial markets gave a tentative thumbs-up to euro zone bank health checks.
● German Business Confidence Falters Again in October | Wall St Journal
The closely watched lead indicator from the Ifo Institute fell to 103.2 after 104.7 in the previous month. This marked the sixth straight decline in the lead indicator.
● Rousseff reelected president of Brazil | RT
Brazil’s leftist president Dilma Rousseff has been re-elected for another term with over 51 percent of the vote in a tight presidential run-off on Sunday.
● As Ebola Spreads, Asia Senses Vulnerability | NY Times
Governments and doctors around Asia are now much more worried that the region’s densely populated cities and towns could be vulnerable if infected people start flying here from Africa.
● Goldman slashes 2015 oil price forecast | Reuters
Goldman Sachs has slashed its 2015 oil price forecasts, making it the most bearish among major financial institutions, following a near 25 percent fall in crude prices over the past five months.