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The most important charts and themes in markets and investing…
1) A Rally for the Ages
In its ongoing rally, the S&P 500 is now up 43% from its April lows. And amazingly, this was successfully done without any significant setbacks.
The S&P 500 is now 2,000 points higher than its April low, crossing above 6,900 this week for the first time. It was his ninth 100-point milestone of the year.
The S&P 500 has now hit 440 all-time highs since the start of 2013, and has hit 36 all-time highs so far this year. That’s the most in any 13-year period in history.
2) Playing With Fire
As is often the case in periods of relentless profits, investors quickly moved up the risk curve:
- SPAC IPOs are back in vogue, with issuances this year of more than $22 billion. That’s the highest number we’ve seen since 2021.
- Meme stocks are seeing a resurgence in interest from speculators, with Roundhill Investments relaunching their ETF ($MEME) a few weeks ago. Their first launch occurred near the peak in late 2021 and the fund closed after poor results in 2023.
- Leveraged products are becoming increasingly popular, from perpetual crypto futures (100x now offered by Gemini) to 5x leveraged ETF filings on individual crypto stocks, sectors, and coins.
When speculative fever is as rampant as it is today, no one thinks about the risks. But when you play with fire, you might get burned, as a 3x short AMD ETF holder recently found out. Leveraged funds fell to 0 after AMD’s 38% surge.
3) Longest Shutdown in History?
Betting markets now expect the US government shutdown to last 47 days. It would be the longest in history, surpassing the 35-day shutdown in 2018-2019.
Does it have a negative impact on the stock market?
Absolutely not.
The S&P 500 has posted positive gains over the last 6 government shutdowns and is up 3% so far over the current shutdown, hitting 8 all-time highs.
4) Inflation Hits Highest Level in 16 Months and the Fed Cuts Interest Rates Again Today
Overall US CPI rose to 3.0% in September, its highest level in 16 months.
Since the start of 2020, we have seen inflation average 4%, double the Fed’s target.
Despite rising inflation, the Fed will cut interest rates by another 25 bps today (down to 3.75-4.00%), likely saying labor market weakness warrants a cut.
When was the last time the Fed lowered interest rates when inflation was this high (CPI >3%)?
October 2008, in the midst of the worst recession/market downturn since the Great Depression.
Currently the Unemployment Rate is 4.3% and the S&P 500 is at an all-time high, up more than 18% on the year.
5) The most absurd number in the CPI
What is the most absurd number in the CPI?
According to the US Government, health insurance costs have decreased 18% over the last 5 years…
Meanwhile, the cost of health insurance has actually increased more than 26% in the last five years.
Since 1999, the average US family health insurance premium has skyrocketed 365%, rising from $6k to $27k). This figure represents an increase of 6.1% per year, more than double the overall inflation rate in that period (2.6%/year).
6) Hello $38 Trillion
The US National Debt has now increased by $1.8 trillion since the Debt Limit was raised in July, reaching $38 trillion for the first time.
Where are we headed next? The sky is the limit…
7) A Pause in the Gold Rush
Gold ETFs recently hit their most overbought record (monthly RSI).
It then fell 6.4% in a single trading day last week, the biggest daily drop in more than 12 years and the 4th biggest since the ETF’s inception in November 2004.
Gold now accounts for more than 20% of global central bank reserves, which is the highest we have seen in nearly three decades.
Over the last 2 years, Gold has moved from 4% to 6% of global investment assets. That’s the highest share since 1986. During the 1980 Gold bubble, the share peaked at 22% of global investable assets. 20 years later (2000) it fell to just 1%.
Before the recent 10% decline, Gold was the best performing major asset class over the past 20 years with annual returns of over 11%.
8) Walmart’s Winning Formula
This fall, the Walmart story will be taught at Harvard Business School as a success case study.
In 2015, Walmart raised wages by nearly half of its 1 million hourly workers – not out of good intentions, but out of necessity. Turnover is high, morale is low, and customers are taking notice. Investors initially reacted negatively to the news, causing Walmart shares to plunge 10%.
But what is the end result after a 48% salary increase since 2016?
A happier & more productive workforce, a better shopping experience, and a 450% jump in stock prices.
9) Buyers Market in Austin
Austin, Texas is America’s strongest buyers’ market with home sellers outnumbering home buyers by 130%.
As a result, home prices in Austin are now down 24% from their peak in June 2022…
10) Some Interesting Statistics…
a) Driverless taxi company Waymo now takes 876,000 trips per month in California, a 6x increase over the past year and a 69x increase since August 2023.
b) A record 10% of US businesses reported using AI in the last 2 weeks, up from 6% last year. What is this figure in a year?
c) China has 44 million metric tons of Rare Earth reserves, more than double the reserves of the next highest country (Brazil).
d) The percentage of US adults who say they drink alcohol has plummeted to 54%, the lowest in the nearly 90-year history of Gallup polls.
e) 71 million Social Security beneficiaries will see a 2.8% cost of living adjustment (COLA) starting in January 2026. Average annual increase over the last decade: 3.1%.
f) US state regulators have approved average home insurance rate increases of 50% since the start of 2020, almost double the overall inflation (CPI) increase of 26% at that time.
And that’s all for this week. Thanks for reading!
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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosure here.
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The purpose of a PBN is to give the impression that the target website is naturally earning links from multiple independent sources. If done effectively, this can temporarily improve keyword rankings, increase organic visibility, and drive more traffic from search results.
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