Above the Fold

Market Checkup

As we enter fall, a season of spending and increased market volatility, it’s always a good idea to take stock (pun intended) of current sentiments and economic drivers. The Q3 (third quarter) earnings season has already begun, but it really picks up steam in mid-October when the major banks offer results. Today, analysts expect a -4.8% decline in Q3 earnings. On the surface that sounds like a major problem, when in reality the hyper-modest expectations set a very low bar for companies to clear. 

Aside from recent calls for an impeachment investigation, much of the world’s risks may be baked in and factored into prices. Corporate executives have done a good job of setting the tone and laying out risks on trade and global growth. Therefore, it’s safe to say that barring a deluge of absolute earnings disappointments (which is unlikely), the path of least resistance for equities may continue to be modestly higher.  

Bond yields, on the other hand, have a less bright future — their fate will be decided by what seems to be an increasingly accommodative Federal Reserve and perhaps by changes in fiscal policy, especially if our moderate economic growth materially slips.

Three Things

1. Arby’s Now Has More Meat – Private equity backed Inspire Brands Inc. will acquire Jimmy John’s Sandwiches, after adding Sonic, Arby’s and Buffalo Wild Wings to its stable over the last two years. The Jimmy’s deal will make Inspire the fourth-largest U.S. restaurant company, with over $14 billion in sales across 11,200 locations.
2. Gold Gains on Uncertainties – The ongoing trade war, coupled with a few not-so-favorable economic data sets globally and the recent push by Democrats for a Trump impeachment inquiry, all have pushed gold to its highest level in nearly three weeks. Despite the rally, several gold experts see prices tempering by year end. 
3. Drone Dropping More Than Packages – Military drone counts are rising at high rates. A recent report by Bard College estimates close to 100 different countries operate 30,000 or more unmanned aircraft globally. The U.S. military currently operates 23 different types of drones, unique for a range of different missions from reconnaissance to ordinance delivery. 

Did You Know?

Uncertain Outcomes Lure Consumers

In the movie “Wall Street,” Michael Douglas’ character Gordon Gekko said that he only “bets on sure things,” but that’s not the case for many of us. In fact, a recent Gallup Poll revealed that nearly two-thirds of Americans gambled in some fashion over the last year. 

Americans who made between $36,000 and $89,999 were the most likely to admit (56% of respondents) they gambled in the last year, and the vast majority believed it was morally acceptable, regardless of whether they had gambled or not. When it came to lottery tickets, just 5% of consumers who purchase tickets account for 51% of the revenue generated. 

And risk apparently pays extremely well, usually for the house, as gambling revenues top $40 billion annually, more than theme parks, movies, spectator sports, cruise ships and recorded music combined.