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What I think I learned last week #45

Even if he does walk around with toilet paper stuck to his shoe, Trump is right: there is no inflation in the US. At least not yet. September consumer prices in the US rose less than expected, falling to a 12 month rate of 2.3%, down from August’s 2.7% rate.

US mortgage rates hit their highest level in more than seven years last week at nearly 5%.

 

Panic! at the Disco? No, but a panic in global stock markets was seen last week as it was down day after down day. The Nasdaq Composite suffered its biggest one-day drop since the Brexit vote in 2016 and the S&P 500 has had its longest losing streak during the Trump Presidency. The Dow Jones average experienced its worst October decline since the financial crisis.

There were all kinds of statistics on how bad markets were last week. Here is one sobering fact: Warren Buffett personally lost $4.5 billion of net worth as Berkshire Hathaway had its worst day in over seven years.

The FTSE All-World index excluding the US has today fallen to a level last seen in July 2017 and is off nearly 9.5% for this year. European stocks hit a two-year low and Taiwan’s stock market had its biggest drop in history. All of the selling meant that $1.7 trillion of market capitalization had been wiped off the S&P 500 and $2.7 trillion from stocks globally.

Even with a bounce on Friday, it was still the worst week for US stocks since….wait for it…..March. I put that in the category of “No Big Deal.”

 

While stocks fell, gold jumped the most in two years as investors finally remembered that it is supposed to be a safe haven.

 

AT&T is planning to offer a streaming video service next year featuring films and TV shows it acquired from its purchase of Time Warner.

 

Time for some financial innovation from Wall Street: the commercial real estate collateralized loan obligation, or CRE CLO. Issuance of CRE CLOs is expected to hit about $13 billion this year, more than twice the amount sold in 2017.

 

The US economy keeps ripping as evidenced by the September industrial production numbers. Not only did it post its fourth consecutive monthly gain, but in so doing, its year-over-year change hit 5.1%, the largest since December 2010.

 

In contrast, Germany slashed its growth forecasts, expecting the economy this year to grow just 1.8%, down from its earlier 2.3% forecast. They also cut next year’s expected growth rate from 2.1% to 1.8% as well.

German carmakers were hit last month as the biggest sales drop in seven years for China’s car sales compounded problems meeting European emissions rules. The new European emission rules caused the Volkswagen group’s European sales fall 37% over the previous September. Mercedes-Benz European sales were off 9.4% for the month.

 

Finally, in case you have not noticed, being a US retailer is a tough business these days. Sears, the 132-year old company that was once the most disruptive and dominant retailer in Americahas filed for bankruptcy. Before Amazon, Sears was the original Everything Store. After Amazon, it is closer to a nothing store.

 

And that’s what I think I learned last week.