The S&P 500 is 5.3% above the high achieved in January of 2018. We last touched this price earlier this month on October 3rd. As the chart below shows, the stock market has largely gone sideways as Fed policies and trade uncertainty have paused the multi-year uptrend.

However, this period of uncertainty may be coming to an end as the trade war with China is on pause and the Fed has found a way to expand its balance sheet one more time through the Repo market. We have another Fed meeting on Wednesday so one more rate cut may put the bookend on this period of consolidation if we can achieve new all-time highs after the meeting.
However, if the market rejects new highs, we can start to worry when 2,875 is broken to the downside. This level is the January 2018 top which should act as structural support. Next week will be heavy on economic data on top of the Fed announcement so there will be much to talk about next week.
Chart of the Week!
The all-time record for surviving the highest fall without a parachute belongs to Yugoslavian flight attendant Vesna Vulović. She was the sole survivior of a bomb placed onboard JAT Flight 367 in 1972 which saw her plummet more than 30,000 feet. Experts believe she survived by being trapped by a food cart inside a section of the aircraft’s fuselage which subsequently landed at an angle on a heavily wooded and snowy mountainside in Czechoslovakia. The following infographic provides a list of known occasions where people survived extremely high falls without a parachute. (Statista)

Economic & Central Banking Snippets
- Existing home sales in September totaled 5.38mm, below the estimate of 5.45mm, down from 5.50mm in August and with declines in all 4 regions. The NAR says that housing is not benefiting fully from the sharp drop in interest rates due to the lack of inventory which leads to affordability issues.
- The Swedish Riksbank is getting away from negative interest rates (now at -0.25%) which will likely be raised to 0% in December. Governor Ingves in his press conference actually said “We are aware that many think negative rates are strange.”
- Asian Exports had a tough September as Japan fell 5.2%, Taiwan fell 4.9% and South Korea was down 19.5%. These areas could rebound if the trade war with China abates.
Macro Snippets
- Libra stokes concerns Banks could cut ties with Facebook if its proposed digital currency is launched before the social media giant addresses regulators’ money laundering fears, the chief executive of ING has warned (FT).
- Boeing is no ordinary company: the grounding of its 737 Max jet has quietly lowered US growth, reduced productivity and trimmed earnings at several other companies. The decision on when to let it fly again, with EU regulators breaking with the FAA, may be an economic turning point. The US aerospace giant announced a 43% drop in third-quarter earnings from operations to $1.3B, on revenues down by 21% in the third quarter to $19.98B. (FT, WSJ)
- SoftBank ‘doubles down’ on WeWork as the board agreed to a $9.5B bailout on Tuesday that set the cash-strapped property company’s valuation at $8B, a fraction of its former $47B price tag. The company is now planning to cut as many as 4,000 jobs as part of an aggressive turnaround plan. (FT)
That is all for now until next week’s Market Update. Thank you for being a subscriber.
Regards,
Paul J. McCarthy, III
President – Kisco Capital