Market Action

• Global equities extended their gains this week and the Dow breached 23,000. Over the last week U.S. fund investors rushed into American and emerging market equities: Stock mutual funds and ETFs overall attracted $5.4B in the week ended Oct. 18, while emerging markets pulled in $2.3B, the most cash since March, according to Thomson Reuters.

• Negotiators from the United States, Canada and Mexico, who recently met to discuss changes to the North American Free Trade Agreement, have indicated they are at an impasse and called for a nearly month-long break in order to regroup, extending the talks into the first quarter of 2018.

• China’s economy grew at 6.8% in the third quarter year-on-year, slightly below the previous period but still above the government’s full-year target of “around 6.5%.” The figure boosts President Xi’s effort to consolidate power at the quinquennial Communist party leadership transition.

• Spain suspended Catalonia governing powers on Thursday. Spanish stocks and bonds dropped on the news, while the euro climbed 0.3% to $1.1817, as Regional President Carles Puigdemont refused to drop his claim to independence. On Saturday the government in Madrid officially triggered Article 155 of Spain’s constitution, announcing plans to remove the leaders of Catalonia and temporarily control the region from Madrid.

• 31-year-old Sebastian Kurz and his conservative People’s Party won in Austria’s parliamentary elections on Sunday, setting Kurz up to become Europe’s youngest leader and putting the country on course for a rightward turn. Austria’s ATX has so far returned 27% YTD, making it the continent’s best-performing developed stock market this year.

Please click here for this week’s update on market returns.

This Week from Blacksummit

Financial Stability and Business Cycle: Cicero on Risk Migration, Exogenous Shocks, and the Twin Engines
John Charalambakis

Recommended Reads

Global Investors Brace for a Cruel New World of Feeble Returns
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Armageddon by Accident
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The Coming Renaissance of Macro Investing
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The Demise of Dollar Diplomacy?
Barry Eichengreen

Image of the Week

This chart shows the Dow Jones index average daily moves for each year since 1900.

Source: @bespokeinvest via The Daily Shot