Top News Headlines

Dow falls seven straight days; longest losing streak in four years
Bonds up for third week in a row; diversification does work
Apple stock in correction territory
Republicans hold first debate; Fiorina, Kasich biggest surprises
Media stocks clobbered; Disney leads to the downside on ESPN woes

Economic News

Incomes up modestly, spending still weak
ISM Manufacturing index less than expected but still above 50
Imports up 1.2%, Exports still falling
ISM Non-Manufacturing survey surges above 60
Challenger layoffs more than double on Army and computer industry layoffs
Employment up 215K jobs; overall picture remains blah

Random Thought Of The Week

Remember that guy out in Seattle who raised the pay of every employee at his company to $70,000? Well, things aren’t working out exactly as planned. He did gain some business from like minded companies but he also lost some. Overall, it looks like a slight gain in business for now. However, he also lost some of his best workers so whether he keeps that business will depend on how well the replacements perform the work. He also got sued by his brother, a silent partner until now who found his voice and wants to protect his investment. So, the effect was to demoralize his best workers, elate the worst, tick off his shareholder and cause a family rift. Any questions about why socialism doesn’t work in the real world?

Chart Of The Week

Okay, technically that’s two charts – crude oil and high yield credit spreads. Think these two things might be related?

Broad Market Top 10 – 3 Month Returns

One probably ought to take special note of the momentum trend here. Bonds occupy 4 of the top 5 spots with the long end outperforming. That doesn’t happen very often and in the past it has not been a good sign for stocks.

See Alhambra’s Momentum Asset Allocation Model portfolios.