Global CIO Commentary by Scott Minerd
“For the first time in 124 years, U.S. exchanges were closed for two consecutive days due to severe weather. My thoughts are with all of the people who have lost or suffered due to the tragic events that have unfolded in the Northeast so far this week.
This storm is going to wreak havoc on certain economic indicators like retail sales. One question is whether there will be an upward distortion in the data for October because of the sudden urgency to buy defensive materials, or if that will be offset by the lost week of shopping at the end of the month, which traditionally has been an important time of year for retailers. Regardless, there will be a great deal of uncertainty concerning monthly data until this is sorted out.
Another consideration is that the costs for this event are being estimated at upwards of $20 billion. This is versus the $16 billion that Irene cost. As construction efforts get underway, however, the boost in employment and the resultant increase in disposable income could actually act as a stimulus in the coming months. Hurricane Katrina caused a quarter of subpar economic output, but two or three quarters after the event, the economy in the region picked up because of the spending on the recovery. With Sandy, it appears that there will be a downturn in economic activity for two or so weeks, meaning a rebound in spending could come online before the end of the fourth quarter.”
Economic Data Releases
Stronger U.S. Housing and Personal Consumption Are Promising For the Holiday Season
Third quarter GDP showed the U.S. economy expanded faster than in the second quarter at 2.0% on a seasonally adjusted annual rate. The stronger growth was led by increases in personal consumption and government spending. Consumption in the U.S. has been improving with personal spending up 0.8% MoM in September, the largest monthly increase in seven months. Personal income rose 0.4% MoM in September, the fastest pace in six months. The housing market continues to show signs of improvement with the Case Shiller national home price index rising 0.5% in August and new home sales rising to a two year high in September. Meanwhile, October's consumer confidence rose to a five-year high according to the University of Michigan. Durable goods orders rose 9.9% in September, the fastest growth rate since January 2010.
European Economic Growth Continues to Deteriorate, Asian Central Banks Ease Further
The Business Climate Index for the eurozone fell to its lowest level in three years in October. Money supply (M3) for the eurozone rose 2.7% in September, the slowest rate in five months, and the Purchasing Managers Index fell to 45.8 in October, the lowest level since June 2009. Real GDP in Spain declined by 0.3% QoQ for 3Q, the fourth consecutive quarter of decline, while the UK fared better with third quarter real GDP rising 1.0% QoQ, the strongest quarterly growth in four years. In Japan, industrial production fell 4.1% MoM in September, the largest monthly decline since March 2011. Japan's central bank eased further by expanding its asset purchase program in addition to launching an unlimited bank loan stimulus program. India's central bank lowered its cash reserve ratio by 25bps to 4.25%.
Chart of the Week
Top 10 Costliest Hurricanes in the U.S. – Damages Ranked in 2010 Real U.S. Dollars
According to the latest estimates, hurricane Sandy will cause in excess of $20 billion in total economic damage, which includes damage to private and public property and public infrastructure. Given this estimate, Sandy will be the fourth costliest hurricane in U.S. history. The impact of the hurricane on U.S. economic activity will be mixed; business activities will be negatively impacted in the coming days and weeks as the impacted area recovers from the damage, but rebuilding activities such as construction will lead to a boost in the coming quarters.
Source: National Hurricane Center, IHS Global Insight.
Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.
Investing involves risk, including the possible loss of principal.
*Assets under management is as of 06.30.2022 and includes leverage of $18.3bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Partners Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
Guggenheim Investments. All rights reserved.
Research our firm with FINRA Broker Check.
• Not FDIC Insured • No Bank Guarantee • May Lose Value
This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.