• ECB reduces stimulus, vows low rates
• US Q3 GDP advances at 3.0% annual rate
• German business sentiment sets record high
• Party congress elevates status of China’s Xi
• Progress on US budget opens way for tax bill

Global equities edged lower this week, with Japan’s Nikkei average a bright spot, closing at a 21-year high. Yields on US 10-year Treasury notes continued their rise, ending the week at 2.42%, up from 2.38% a week ago.

The price of a barrel of West Texas Intermediate crude oil rose about $1 to $52.60 while equity market volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), advanced to 10.8 from 9.9 last week.

MACRO NEWS

ECB trims QE program but vows continued low rates

The European Central Bank (ECB) announced that will halve its bond-buying program to €30 billion from €60 billion a month from January through September 2018, or longer, if necessary, until inflation is revived. The move was widely expected, with the market generally delivering a muted response following the news.

In addition, the ECB said it will reinvest the principal from maturing bonds for an extended period after the end of the bond-buying program. German 10-year bunds, the German benchmark, fell nearly 7 basis points in yield on the news, to 0.41%, while the euro gave ground versus major currencies.

Pace of US GDP growth exceeds forecasts

The US economy grew at a faster-than-forecast pace of 3% in the third quarter, handily beating 2.5% forecasts. Economists had expected a moderate Q3 slowdown because of the impacts of hurricanes Harvey and Irma.

Real consumer spending showed continued strength last quarter, rising 2.4%, which exceeded forecasts for a 2.2% advance. Core inflation remained well below the US Federal Reserve’s 2% target, coming in steady at 1.3%.

German business confidence jumps

The IFO Business Climate Index hit a record high this week, reflecting confidence that Europe’s economic recovery will extend into the future. The improved sentiment is notable in that it comes against a backdrop of uncertainty surrounding Brexit, Catalan independence and the final makeup of Angela Merkel’s ruling coalition.

China’s Xi now on par with Mao

At the conclusion of a weeklong congress of China’s Communist Party, Xi Jinping was elected to a second term as president. In addition, members of the congress voted unanimously to revise the party’s constitution to include “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.” The only two leaders whose thoughts are enshrined in the party’s constitution are Mao Zedong and his successor Deng Xiaoping.

Analysts note that the makeup of the new Politburo Standing Committee suggests that the 64-year-old Xi may serve beyond the completion of the traditional two five-year terms.

US House passes Senate’s budget blueprint; tax reform next

After a year of dysfunction, congressional Republicans appear to be rallying around efforts to reform the bloated US tax code. On Thursday, the House of Representatives passed the Senate’s budget bill, laying the procedural groundwork for the passage of a tax reform package without any support from the Democratic opposition.

An initial bill is set to be released as early as next week, with a vote possible by late November. Details of the measure are still being worked out as constituents balk over the potential loss of tax deductions for state and local taxes, as well as potential changes to the tax treatment of retirement plans such as 401(k)s.

Stars align to lift US dollar

The US dollar advanced strongly late in the week, particularly against the euro, lifted in part by the ECB’s relatively dovish shift toward a less accommodative monetary policy. Also supporting the greenback were press reports that US president Donald Trump has ruled out reappointing Janet Yellen as Fed chair.

Yellen was seen by market participants as the most dovish candidate on Trump’s short list. Fed governor Jerome Powell and Stanford University economist John Taylor are reportedly the frontrunners for the post. Rising hopes for an overhaul of the US tax code also helped spur dollar strength.

UK business groups warn they will move jobs out of UK

The leadership of five large British business groups, including the Confederation of British Industry and the British Chamber of Commerce, wrote to Prime Minister Theresa May this week that their members will start moving jobs and investment outside the United Kingdom if a transition deal with the European Union is not agreed soon.

UK business investment slowed sharply in the wake of the June 2016 Brexit vote, and has been flat since that time, recent figures show, owing to uncertainty over the UK’s future relationship with the EU.

Japan’s Abe secures supermajority

Japanese prime minister Shinzo Abe won a landslide victory in last weekend’s general election, opening the way for a push to amend the country’s pacifist constitution. Abe campaigned on the idea that the threat from North Korea requires leaders to remove any doubt over the legitimacy of Japan’s military.

In the wake of Abe’s reelection, the Nikkei 225 Index ended the week above 22,000 for the first time in 21 years.

EARNINGS NEWS

With 45% of the constituents of the S&P 500 Index having reported Q3 earnings, the blended estimate for aggregate year-over-year earnings growth is 5.3%. Excluding the energy sector, the earnings growth estimate is 3.0%. The blended aggregate revenue growth projection for the quarter is 4.8%. However, stripping out energy, revenue is expected to rise 3.9%.

All the best and have a great week

Stuart

CEO

Farringdon Group

+60 3 2026 0286

• Investors move more cash into equities
• Fourth round of NAFTA talks wraps up
• Fed sees US economy maintaining growth pace
• US Senate budget resolution paves way for tax bill
• Spain may impose direct rule on Catalonia

Global equities extended their gains this week amid signs the global economic expansion continues apace. Tax reform hopes in the United States and record-high equity indices helped fuel a rebound in US Treasury yields, which saw the yield on the 10-year note rise 10 basis points to 2.38% this week. Oil prices held steady, with a barrel of West Texas Intermediate crude oil changing hands at $51.70.

MACRO NEWS

Averages post fresh records amid bullish sentiment

 
Investor sentiment readings continued to improve this week as US equities again pushed to record highs. The latest Investors Intelligence survey showed that 60% of Wall Street newsletter writers were bullish on the market, up from 47% in early September, while the American Association of Individual Investors sentiment survey showed that 40% of retail investors were bullish on stocks over the next six months, an above-average reading.

Meanwhile the Merrill Lynch fund managers’ survey reported that cash is moving off the sidelines and into equities, bringing average cash balances down to 4.7%, the lowest level since May 2015. Cash levels would need to dip further to generate a contrarian sell signal though, according to the firm.

NAFTA talks to extend into 2018

Negotiators from the United States, Canada and Mexico, who recently met to discuss changes to the North American Free Trade Agreement, had aimed to conclude talks by the end of 2018, well in advance of Mexico’s July presidential elections and US mid-term congressional elections next fall, but lack of progress has forced them to extend the talks into the first quarter of 2018.

Officials from the three nations made clear they are at an impasse and have called for a nearly month-long break in order to regroup. US trade representative Robert Lighthizer said he had seen no indication that the trading partners were willing to make any changes that will result in a reduction in trade deficits.

Fed: Economy to expand despite hurricanes

The US Federal Reserve’s Beige Book, a report prepared in advance of each meeting of the rate-setting Federal Open Market Committee, said that the US economy continues to grow at a modest to moderate pace despite some disruptions from a series of hurricanes.

Labor markets remain tight, with employment growth modest, according to the report. The Fed termed inflationary pressures as modest. Markets expect one more rate hike from the FOMC before the end of the year, probably in December.

Tax reform hopes raised as US Senate passes budget resolution

A fractious US Senate passed a fiscal year 2018 budget resolution late Thursday evening, helping pave the way, from a procedural standpoint, for a tax reform bill later this year. A conference committee will need to iron out differences between the House and Senate budget resolutions in the coming weeks.

The Trump administration hopes to pass a tax bill before the end of the calendar year, though few would be surprised if the process extended into 2018.

Spain said to hold January regional elections in Catalonia

 
The Spanish government is said to have reached agreement with socialist opposition parties to hold regional elections in Catalonia in January. On Saturday, the government is expected to invoke Article 155 of the Spanish constitution, which would allow the central government to impose direct rule over the region in the event of a crisis.

Catalonia’s leader, Carles Puigdemont, will counter by calling for a formal independence vote in Catalonia’s parliament. Spanish authorities hope January’s elections will produce a pro-Spanish government, putting an end to the crisis. Some fear that independence backers will boycott the election, calling its legitimacy into question.

China’s National Congress begins

China’s 19^th Communist party congress began this week in Beijing, kicking off with a three and a half hour speech by President Xi Jinping. Economic reform took a back seat to the theme of national rejuvenation in the speech. Xi will be given a second five-year term atop the party at the end of the meeting. Also this week, China reported that its economy grew at a 6.8% annual rate in the third quarter, down a touch from the 6.9% pace registered in the first two quarters of the year.

EU officials punt “sufficient progress” decision until December

The European Council met this week, but deferred a decision on whether or not Brexit negotiators had made sufficient progress on a series of issues to allow the talks to move on to the topic of the future relationship between the United Kingdom and the European Union. While negotiations appear to be bogged down, German chancellor Angela Merkel said Friday that she is hopeful talks will be able to progress to future trade matters in December.

All the best and have a great week

Stuart

CEO

Farringdon Group

+60 3 2026 0286

Bitcoin was invented as a peer-to-peer system for online payments that does not require a trusted central authority. Since its inception in 2008, Bitcoin has grown into a technology, a currency, an investment vehicle, and a community of users. In this guide we hope to explain what Bitcoin is and how it works as well as describe how you can use it to improve your life.

What is Bitcoin?

Since anything digital can be copied over and over again, the hard part about implementing a digital payment system is making sure that nobody spends the same money more than once. Traditionally, this is done by having a trusted central authority (like PayPal) that verifies all of the transactions. The core innovation that makes Bitcoin special is that it uses consensus in a massive peer-to-peer network to verify transactions. This results in a system where payments are non-reversible, accounts cannot be frozen, and transaction fees are much lower.

Where do bitcoins come from?

Buybitcoinworldwide go more in-depth about this on the page about mining, but here’s a very simple explanation: Some users put their computers to work verifying transactions in the peer-to-peer network mentioned above. These users are rewarded with new bitcoins proportional to the amount of computing power they donate to the network.

Who controls Bitcoin?

As mentioned above, there is no central person or central authority in charge of Bitcoin. Various programmers donate their time developing the open source Bitcoin software and can make changes subject to the approval of lead developer Gavin Andresen. The individual miners then choose whether to install the new version of the software or stick to the old one, essentially “voting” with their processing power. It is in the miners’ best interest to only accept changes that are good for the Bitcoin currency in the long run. These checks and balances make it difficult for anyone to manipulate Bitcoin.

How to get started with Bitcoin

The best way to learn about Bitcoin is to get some and experiment. www.buybitcoinworldwide.com have written articles about how to set up your own Bitcoin wallet, how to acquire bitcoins, and how to use bitcoins to help you get going. They have also written about a number of other Bitcoin topics if you prefer a hands-off approach to learning. If your questions remain unanswered, please contact www.buybitcoinworldwide.com and ask us anything you like.

All the best

Stuart

CEO

Farringdon Group

+60 3 2026 0286

Article – Courtesy of www.buybitcoinworldwide.com

• US retail sales improve, CPI boosted by gasoline
• IMF nudges up global growth forecast
• Brexit talks at apparent impasse
• FOMC on course for December rate hike

Stocks continued their advance into record territory, marking the fifth consecutive weekly gain for the large-cap Dow Jones Industrial Average and S&P 500 Index. The week brought the first releases of major third-quarter earnings reports, with JPMorgan Chase and Citigroup falling Thursday after reporting lower fixed income trading revenues and higher set-asides for credit card losses. Wells Fargo reported an earnings’ decline on Friday, further weighing on the broader financials sector.

Consumer staples stocks performed well, boosted by a surge in Wal-Mart shares after the retail giant announced a massive share repurchase program and predicted a strong rise in online sales. Oil recouped some recent loses, rising to $51.50 per barrel from $49.50 last Friday.

MACRO NEWS

US retail sales rebound in September

After dipping 0.2% in August, US retail sales rebounded strongly in September, rising 1.6%. Higher gas prices in the wake of Hurricane Harvey and a jump in auto sales were major contributors. Higher gas prices also contributed to a 0.5% advance in the Consumer Price Index in September. Stripping out food and energy, prices rose a muted 0.1% last month.

IMF kicks off fall meeting with growth upgrade

As finance ministers and central bankers gather in Washington this week for the fall meetings of the International Monetary Fund (IMF) and World Bank, IMF economists released their latest World Economic Outlook. The fund’s growth forecast was slightly more upbeat, with global gross domestic product expected to expand 3.6% this year and 3.7% in 2018, a 0.1% increase from the last update in July.

IMF chief economist Maurice Obstfeld called the current global acceleration notable because it is more broad-based than at any time since the start of this decade. This year runs counter to many recent years when economists were forced to trim overly optimistic forecasts rather than raise them.

Juncker: Pay first, talk later

European Commission president Jean-Claude Juncker said on Friday that the United Kingdom would need to pay its “divorce bill” before discussions can proceed on trade and future relations between the UK and the European Union.

The EC leader said that negotiations have advanced more slowly than expected and that it is unlikely the European Council will agree when it meets next week that sufficient progress has taken place for negotiations on the future relationship to begin. Earlier in the week EU chief Brexit negotiator Michel Barnier said discussions on the financial settlement were deadlocked.

Fed signals December rate hike likely

Minutes from the September meeting of the US Federal Reserve’s Federal Open Market Committee show that “many” members thought another rate hike was likely to be warranted late this year if the economic outlook remains roughly unchanged.

However, some members expressed concerns that recent soft inflation data may not be temporary, owing to idiosyncratic factors, as the committee has stated in the recent past. Falling prices for things such as mobile phone service and prescription drugs have temporarily suppressed inflation, according to the Fed.

Trump takes executive action on health care

With efforts to repeal and replace the Affordable Care Act blocked in Congress, US president Trump this week issued an executive order to reform the health care sector. The order allows employers to band together to form groups, potentially lowering the cost of coverage. It also allows insurers to offer coverage across state lines.

In addition, the administration is expected to announce later today that it will halt payments to insurers to offset government subsidies for low-income purchasers. Insurance carriers have been raising premiums in recent months in anticipation that the payments would be halted.

ECB setting stage for next policy phase

The European Central Bank appears to be moving towards shifting its exceptionally easy stance over monetary policy before the end of the year. One proposal reportedly being considered by the ECB is to cut in half the rate at which it buys European bonds, from €60 billion to €30 billion beginning in January, and keeping the program active for at least nine months.

At the same time, ECB president Mario Draghi said in Washington that policy rates will not be raised until well past the end of quantitative easing. Markets appear to be focusing on the policy rate forecast more than the QE rumors, with 10-year German bund yields falling 4 basis points on Friday to 0.41%.

European Stocks Rise

European stocks ended the week higher, with two key benchmark indexes, Britain’s FTSE 100 and Germany’s DAX 30, reaching record highs. A slide in the pound boosted investor confidence in the multinational companies that dominate the FTSE 100 and generate sales in foreign currencies. Mining stocks were strong, buoyed by solid import demand from China.

The pan-European benchmark Stoxx 600 ended the week marginally higher. European equity funds posted solid weekly inflows overall, according to EPFR Global data.

All the best and have a great week

Stuart

CEO

Farringdon Group

+60 3 2026 0286

• Nonfarm payrolls fall in wake of hurricanes
• Catalonia expected to declare independence
• Global economy continues to purr
• Fed short list makes rounds
• Trump expected to de-certify Iran nuclear deal

Global equities extended their gains this week, with the MSCI All Country World Index hitting a record high. Solid economic data and hopes for a tax reform package helped push the yield on the US 10-year Treasury note to 2.38% from 2.32% a week ago. West Texas Intermediate crude oil slipped to $49.50 a barrel from $51.50 last Friday while equity volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), closed at a record on Thursday and traded at 9.50 early Friday.

US payrolls fall for first time since September 2010 
Hurricanes Harvey and Irma combined to bring an end to a seven-year streak of positive US payroll reports. Thirty-three thousand jobs were lost in September as a result of the storms, though the unemployment rate dipped to 4.2% due to a temporarily smaller labour force. Average hourly earnings rose to an annual rate of 2.9%, but economists warn that storm-related distortions are likely partially responsible for the rise. It is likely to be another month or so before the storms’ impacts work their way through the data. An unexpected positive effect of the hurricanes was a spike in September auto sales as consumers replaced vehicles damaged in the storms.

Declaration of independence expected from Catalonia
Catalonia, the wealthy Spanish region that is home to Barcelona, is expected to declare independence from Spain next week. The move comes in the wake of a crackdown by the Spanish central government on 1 October intended to suppress an independence referendum. Ninety percent of the ballots cast were for independence, with those opposed largely boycotting the vote. Analysts expect next week’s declaration to be largely symbolic, and Catalan leaders are likely to accept a devolution of powers from Madrid, particularly on fiscal matters, rather than pushing for a complete break. Catalonia pays roughly €10 billion more to the Spanish central government than it receives in state services.

Global economy continues expansion
Figures from the United States, Europe and China released this week all showed continued solid economic growth. September figures for the US manufacturing and services sectors both showed their strongest readings in more than a decade, but the US data may have been somewhat distorted by the recent hurricanes. The Institute for Supply Management manufacturing index rose to 60.8, the highest level since September 2004, while the nonmanufacturing reading came in at 59.8, a level not seen since August 2005. European data were similarly robust, and China also showed continued upward momentum.

Trump reportedly narrows the Fed chair field
Bloomberg News reported this week that aides to US president Donald Trump have narrowed the list of candidates for chair of the US Federal Reserve to four, or perhaps five, people. Trump has reportedly spoken with Fed chair Janet Yellen about re-upping, though she is not expected to receive reappointment, according to the report. Sitting Fed governor Jerome Powell, former governor Kevin Warsh and National Economic Council director Gary Cohn have all reportedly spoken with the president about the position, while Stanford University economist John Taylor has apparently not been interviewed but is said to be under consideration. All are known quantities to the markets, with Warsh and Taylor seen as the most hawkish of the group.

Iran nuclear deal expected to be decertified 
In a move that will likely draw criticism from European allies, President Trump is expected next week to decertify that the Iran nuclear deal — designed to restrain Iran’s nuclear ambitions — is in the security interests of the US. Presently, the president must certify the agreement every 90 days. If the president withholds certification, Congress then has 60 days to decide whether to reimpose sanctions on Iran. It is possible that the pact will ultimately hold together if Congress does not apply sanctions.

Puerto Rico’s bonds gyrate after talk of restructuring
An offhanded comment from President Trump that the $73-billion debt of Puerto Rico may get wiped out sent the island’s general obligation bonds skidding in price this week. Trading near 44 cents on the dollar before the comments, the bonds fell to around 30 cents before stabilizing, according to the Wall Street Journal. The White House later indicated that it does not intend to get involved in Puerto Rico’s restructuring.

First steps toward US tax reform underway
The US House of Representatives took the first step toward passing a tax overhaul by approving a fiscal- year 2018 budget blueprint. Congress must pass a budget before a tax bill is allowed, under Senate budget reconciliation procedures, to pass in that body with only 51 votes, rather than the 60 needed to end a filibuster. Passage of the House measure ups the odds that tax reform could be enacted early in 2018.

All the best and have a great week

Stuart

CEO

Farringdon Group

+60 3 2026 0286