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Illustration: Eniola Odetunde/Axios
Normally the health of business in a country is what drives its asset prices, but that's not what's happening at the moment, according to Deutsche Bank Securities chief economist Torsten Slok.
What's happening: The S&P 500 has risen by around 20% so far this year, despite weakening U.S. economic data and a slowing labor market. Earnings growth, typically the bread and butter of equity market returns, was negative in the second quarter and is expected to be negative in the third and fourth quarters as well.
What we're hearing: Slok, a typically even-handed economist, expressed his disbelief at the decoupling of asset prices from growth in a recent note to clients.
Why it matters: This isn't the way public markets are supposed to function.
The big picture: In an email exchange, Slok asserted that there were 3 reasons "this time is different" from other Fed "puts," or bets by investors that central banks will step in to lower rates if stock prices get too low.
The bottom line: Asset managers and economists have long suggested the Fed and other central banks are overly concerned with stock prices. But, as the chief economist at a major investment bank, Slok is one of the first in his position to allege stock prices could be this influenced by central bank policies.
Hedge funds saw overall negative returns for the second month in a row in September and ended the quarter slightly negative, underperforming both the S&P 500 and a fund tracking 50% stocks and 50% bonds from around the globe, per eVestment data released Wednesday.
The big picture: Diversity within hedge funds continued to be a major theme, as fixed income and credit funds delivered positive gains last month, but broad financial derivatives funds returned losses of nearly 4%, dragging down the overall industry figures.
Of note: Russia and China-focused funds have been the best performing funds of all types tracked by eVestment so far this year, delivering returns of nearly 16% and 15%, respectively.
Ahead of expected tariff increases on consumer goods from China, imports at the nation’s major retail container ports are expected to hit their highest level of the year again in November.
Why it matters: The report is the latest data point to show that President Trump's trade war is spurring an increase, rather than a decrease, in buying from China and other foreign exporters. The pace of imports at retail container ports has consistently risen during Trump's time in office.
What they're saying: “This is the last chance to bring merchandise into the country before virtually everything the United States imports from China comes under tariffs,” Jonathan Gold, NRF VP for supply chain and customs policy, said in a statement.
The bottom line: New tariffs on a range of Chinese goods took effect at the beginning of September and are scheduled to be expanded on Dec. 15 — covering nearly every good traded between the 2 countries.
Minutes from the Fed's September policy meeting were released Wednesday, showing there was likely more opposition to its rate cut than just the 2 dissenting votes that were cast.
Details: The minutes showed debate had grown about when the Fed should stop cutting rates and "several members" wanted to keep rates on hold.
Be smart: One thing has become abundantly clear after the release of the Fed's minutes and Chair Jerome Powell's speech in Denver on Tuesday: the Fed is going to start buying U.S. Treasury bills.
The U.S. job market remains strong, with more job openings than unemployed people seeking a job, but companies are starting to put some hiring plans on hold.
The big picture: The U.S. had 7.05 million job openings at the end of August, the Labor Department reported on Wednesday, but after torrid increases over the past 2 years, the number of jobs businesses have to offer is beginning to turn lower, but not because firms are filling the positions.