The Shutdown Continues

As the government shutdown continues into its 31^st day. Most economic reports are AWOL. But there’s is plenty to talk about with respect to interest rates and 3^rd quarter earnings as the reporting season really hit its stride this week. Pushing the major averages to another solid gain at the close of trading. Since last Friday’s bell the S&P 500 is up 78 points or 1.15%; the NASDAQ jumped 520 points or 2.24%; while the DOW gained 356 points or .75%. Despite all sorts of dire mainstream media predictions that the sky was falling and the world was about to end.

Fed Cut Rates

As has been the pattern now for almost a year. Market interest rates went up again. Notable jumps were recorded for mortgages, auto loans and consumer finance following the latest ¼% cut by the Federal Reserve following the conclusion of the Federal Open Market Committee Meeting or FOMC earlier this week. While the ¼% cut was expected, so to is an additional ¼% cut in December at the years last FOMC meeting. Other notable announcements included an end to Quantitative Tightening or QT effective December 1^st. As the Fed will end its program of balance sheet reduction after 3.5 years.

Where’s The Money?

It looks like the S&P 500 3^rd quarter earnings reporting season is on track to report another quarter of double-digit earnings growth. With 64% of companies reporting so far, earnings growth is running an impressive 10.7%. If this figure holds it will mark a 4^th consecutive quarter of double-digit earnings growth for the index. Led by Information Technology, Utilities, and Financials.

 Revenue growth also looks to put up some impressive numbers. With the 3^rd quarter revenue growth rate running 7.9%. If this figure holds it will be the highest revenue growth rate seen since Q3 2022.

Wrong Side Of History

All of this despite a literal parade of doom and gloom from the mainstream media this year and most mainstream economists. That Trump was going to trigger a devastating trade war with his poorly considered tariffs. Inflation and unemployment were going to spike. Economic growth or GDP was going to crater and usher in a recession. It is one thing to be wrong, God’s knows I’ve got it wrong more than once in this life. But when entire groups come down dramatically on the wrong side of history. I’m left wondering. Was it bad data? Emotional bias? Too much Kool-Aid? Or a mental disorder?

Happy Halloween everyone! See you next Friday.

Last Week’s Post: Markets Are Up