Twitter can apparently track user sentiment, and according to it, Monday of last week was the single saddest day in the US since twitter records began in earnest. The news of the largest single shooter massacre in US history, at a country music festival in Las Vegas stunned the population, representing, as it did, a very real and homegrown threat, and illustrating the extreme improvements in easily available semi-automatic weapons.
Even the NRA seemed to be on board with blocking some of the hardware available to supercharge a gun this week, so maybe some bi-partisan legislation will be likely in weeks and months to come.
September performance was positive for most equity markets, with the exception of some European peripherals, with Europe and financials there particularly strong. The S&P 500 is now up over 14% for the year, while the MSCI EM index remains strong at +28%. Bonds were the biggest losers in September, as they lost some ground on the back of the Fed announcement (noting market strength and the pending unwinding of the bond purchase program) and the ongoing equity market strength.
The chart above, provided by UBS, illustrates the fact that global growth as expressed by earnings growth is finally starting to gain momentum and promise. This was supported by various macro views we heard expressed in Washington DC this week, where the outlook for Europe was very positive (with the notable exception of the UK), and the rejection of Marine Le Pen noted as a monumental turning point for the continent.
Within the US, pundits in DC seemed optimistic that some progress would be made on tax reform, although there was vagueness on the details that might be hammered out.
Much discussion was also given to the likely new Chairman of the Fed, with Kevin Warsh looking like a frontrunner (but likely unknown in terms of impact) and Jerome Powell, regarded as a candidate that could offer stability and “more of the same”, now that Janet Yellen’s reappointment seems unlikely. The binary nature of these results could well jolt markets once announced within 2-3 weeks, as could ongoing rumors of dissent within the administration, as most recently (and colorfully) expressed by Secretary of State Rex Tillerson (according to NBC sources).