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What I think I learned last week #44

The UK needs to improve its geography curriculum. Not only has the country decided it is not part of Europe, but also is preparing to quit the Atlantic Ocean, as Japan has said the UK would be a welcome member in the Trans Pacific Partnership.

 

IMF lowered its global growth forecast by 20 basis points for both 2018 and 2019 in its latest World Economic Outlook as it now expects global growth to be 3.7% in each year. The report noted the downward revision reflects surprises including the negative effects of tariffs and a weaker outlook for some key emerging markets. They said risks are shifting to the downside and stressed the need to avoid protectionist policies.

 

The US trade deficit increased to a six-month high in August as exports dropped further amid declining soybean shipments and imports hit a record high.

 

China’s central bank has moved to inject more cash into the financial system and boost economic growth by cutting reserve requirement ratios for most commercial banks, freeing up 750 billion yuan (approximately $109 billion) of capital.

 

European Commissioner Margrethe Vestager, noted opponent of all things successful and American (I know, redundant), said her government will not re-appoint her for another term.

 

The US unemployment rate fell in September to its lowest level since 1969, as the unemployment rate dropped to 3.7%. Average hourly earnings were up 2.8%, year-over-year.

 

On the topic of increasing wages, Amazon said last week that it plans to increase the minimum wage paid to US workers to $15 an hour as the labor market tightens ahead of the holiday shopping season.

 

Costco’s quarterly sales barely beat analysts’ estimates on Thursday as growth in online business decelerated to its slowest in the year amid intense competition, while gross margins fell on rising costs and higher investments.

 

GE had best week since 2009 after firing its CEO and replacing him with Larry Culp.

 

Gucci’s head reassured staff over a looming slowdown in sales growth after its recent revenue explosion, according to an internal video message.

 

Last week gave us a bond market bloodbath, with the greatest single-day Treasury rout in nearly 28 years. You have to go back to January 16, 1991 when President George H.W. Bush announced the start of the first Gulf War to see such a bond selloff.  The yield on the 30-year Treasury bond reached a four-year high of 3.396 %. The benchmark 10-year yield has risen over 3.25%, levels last seen seven years ago. Spilling over into this week, the rout continued as two-year note hit 2.906%, its highest yield in over ten years.

 

Stock markets joined in on the selling fun late last week, and it continues into this week. The Nasdaq and S&P 500 were both headed towards their biggest one-day drops since April 6.

 

Honda and General Motors are teaming up on self-driving cars. The partnership will focus on GM’s unit for autonomous vehicles, Cruise.  Honda’s $2.75 billion investment comes just four months after SoftBank’s Vision Fund invested $2.25 billion.

 

Meanwhile, current automobiles look lackluster as US auto sales dropped 7% in September and 4% during the third quarter, compared to the same periods one year ago. However, September’s numbers were affected by Hurricane Florence. It is difficult to go shopping for a car when your street is flooded.

 

In other falling auto news, the much-discussed Aston Martin IPO came and went…nowhere, as shares dropped by as much as 6.5%.

 

Funding Circle joined in the London IPO flop category, as the fintech company fell as much as 20% from its IPO price of 440 pence before settling at 365 pence per share.

 

Finally, with all of the market turmoil and everyone in Europe focused on Italy’s problems, don’t forget about Greece. Shares in the banking sector have lost about 30% since the beginning of September on fears of increased capital needs.

 

 

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