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CEOs, central bankers and money managers say they're operating in a world where they have no idea what's coming next, leaving them with few options but to prepare for the worst, Axios' Courtenay Brown writes.
Why it matters: Uncertainty about a handful of unprecedented phenomena — the grinding trade war with China, the ever-changing Brexit debate and President Trump's government-by-tweet — is inflicting pain on the global economy.
Driving the news: Everyone is stymied over how to make financial or investment plans for the future because the rules keep changing by the day. Corporate America is still raking in eye-popping profits, but it is also in a decision-making tailspin.
Powerful central bankers are also throwing up their hands, and there are doubts that the central banks' primary policy tool — adjusting interest rates — will be enough to stave off a slowdown caused by the tariff tit-for-tat with China and political disarray in the U.K.
Main Street is grappling with a lot of questions, too, mostly about how to absorb the impact of tariffs.
Consumers, too, are in a bind.
The ISM non-manufacturing index beat expectations in August, bouncing back after 2 straight monthly declines and delivering the highest reading in 3 months.
Yes, but: The employment segment of the report continued to show declines, dropping to the lowest reading since March 2017.
Wall Street was unfazed by those details, choosing instead to focus on solid production and new orders segments that surged during the month.
There was little change to the list of the world's most-held stocks, according to data from research firm eVestment.
Methodology: The quarterly stock ownership report analyzes long-only active equity portfolio holdings data reported to eVestment by active managers. The report includes a look at ownership of stocks from firms based in the U.S., U.K., Germany, Japan and emerging markets.
U.S. companies issued $74 billion of investment-grade bonds this week, between just Tuesday and Thursday, the most for any comparable period since records began in 1972, Bloomberg reported Thursday. That was nearly double the previous record of $40 billion set in 2013.
What happened: Issuers were able to sell into a historically thirsty market, with 30-year bonds from companies like Disney, Deere and Apple carrying record low coupons, and investment-grade bond yields dropping to a 3-year low of 2.77%.
Investors didn't have to wait until the back half of the year. The bond market took a hard turn on Thursday after the strong economic data and positive trade war news, spiking bond yields higher.
Globalization has played an increasingly large role in determining the rate of inflation over the last decade, asserts a new Brookings paper from MIT global economics professor Kristen J. Forbes.
Why it matters: With inflation more "determined abroad" than ever before and outside the control or purview of central banks, it may be time for a major overhaul in the way they operate.
Details: In her paper, Forbes highlights 4 areas of globalization that affect inflation: "increased trade flows, greater use of supply chains to optimize production costs, greater role of emerging markets and their impact on commodities, and a reduction in the bargaining power of workers."
What it means: Globalization has helped increase company profits by opening up new sales destinations and increasing trade, while also making trade more efficient.
The big picture: The study's findings also suggest that central banks may be losing their power to direct the economy. If raising and lowering interest rates does not produce a corresponding reduction and increase in inflation, then central banks' role as financial arbiters may need to be revamped.
Between the lines: With inflation having failed to exceed the targets of the Fed, ECB and other major central banks, pressure has grown for them to focus more on stimulating economies to provide maximum employment.
The bottom line: If central banks can't completely control inflation, efforts to stimulate or rein it in may be misplaced and/or generally ineffective.