It’s been a newsy one for global markets, but we’re still in the grips of the dullest week for the S&P 500 since April.
This morning, we continue to absorb a divided Fed’s “hawkish cut” as other central bankers met up — Norway hiked, while the Bank of England, the Swiss and the Japanese held steady. Meanwhile, from Paris, the Organization for Economic Cooperation and Development predicted the worst global economy growth since the financial crisis.
As a long-term investor, you’re taught to ignore the daily grind, keeping those eyes on the prize! Backing that up, our call of the day from Bernstein Research says that 10 years from now, you’ll still be better off in equities.
Bernstein strategists Inigo Fraser-Jenkins and Alla Harmsworth argued the respective cases for the S&P 500 SPX, +0.23% to reach 4,000 and 8,000 over that time frame. Where they agree is on this bottom line: even if the index is not going to keep rising at the pace it has over the last 40 years, equities are still the best asset class to beat inflation.
As for their separate arguments, Fraser-Jenkins says there are plenty of reasons that the S&P can’t go higher than 4,000. Chiefly, he points to evidence that equities are expensive using the Shiller cyclically adjusted price-to-earnings ratio (a popular stock-valuation measure). Also, low yields and baby boomers pouring money into stocks have helped keep the S&P moving up, and household equity allocation is at an all-time high, he says.
In the S&P-is-going-to-8,000 corner, Harmsworth argues that the Shiller P/E has wrongly forecast low returns for most of the last decade.
Even if households don’t keep buying stocks, there’s plenty of proof companies will keep buying back their own shares, with some $820 billion in buybacks announced this year alone, said Harmsworth. Microsoft and Target each just dropped news on this front (see below).
The Dow DJIA, +0.19% , S&P SPX, +0.23% and Nasdaq COMP, +0.40% are higher at the start of trade. Gold GCZ19, -0.42% is weak, along with the dollar DXY, -0.28% . The yen USDJPY, -0.44% is up after the BOJ made no change. Oil CLV19, +1.26% is up as an Iranian diplomat warns of all-out war in case of an attack over the weekend Saudi drone strike.
The U.S. stock market is five times the size of its closest competitor, accounting for just under half of global equity value. That’s laid out in our chart of the day from Howmuch.net using World Bank data. The U.K. and Italy are left out of this, but note that the London market comes in at $4.7 trillion and Italy’s at $650 billion:
After a dramatic exit as CEO of Overstock, Patrick Byrne sold his big stake in the retailer, blaming the Securities and Exchange Commission, or, as he now calls the regulator, “the Deep State’s pets.”
320 metric tons. That’s how much plastic waste Restaurant Brands International’s QSR, +0.55% Burger King says it will cut annually via a ban on toys in kids’ meals, the fruit of a petition started by two sisters. The burger chain will also melt down old toys, but McDonald’s MCD, +0.29% says its Happy Meals will stay the way they are.
Meanwhile, a climate-change lawsuit by school kids against the U.S. government is at a crossroads.
“This is not the way everybody behaves.” That was former Twitter CEO Dick Costolo criticizing WeWork’s “self-dealing” and conflicts of interests, which are said to be hampering IPO plans in the Wall Street Journal’s look at how the real-estate group got its start.
Hurricane Humberto lashed Bermuda, while another one heads toward Mexico’s Pacific coast.
Canadian leader Justin Trudeau is in hot water over a yearbook brownface photo.
Milk and juice is all kids need to drink, says new study.
Supreme Court Justice Ruth Baker Ginsburg fires back at suggestions she should have retired under the Obama administration.
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