It’s become my recent custom to use my current trends file to provide the weekly message twice each month. Two-weeks ago I shared the mid-September look, below, chronologically, is the balance of the month.

In a nutshell, the stock market setup — for economically cyclical sectors in particular — looks very decent for the fourth quarter (gotta expect election volatility, however). And the global economy is sending signals that do not nearly support the narratives of the doom-and-gloomers who continue to come out of the woodwork. Believe me, I’m not complaining, those doomsayers can keep pessimism alive, and that’s generally a good thing in terms keeping a bull market alive.

Note: While the future looks bright enough, we are open to all possibilities (anything can happen!) and, therefore, remain diversified and keep allocations — portfolio by portfolio — consistent with each respective client’s temperament and time horizon:

• Japanese firms have created 440k jobs in Europe. Nearly half of Japan’s foreign direct investment last year went to the UK. I don’t know that Brexit-yes voters really thought it through.
• London-based firms are looking for office space in Dublin. Hmm…
• Emerging Markets look very good technically.
• Utilities have bounced in Sept. I’m guessing in anticipation for no Fed hike this month. However, they’re setting up for a classic negative technical pattern (head and shoulders) if they rollover soon.
• Market breadth has weakened of late, but not to the point that would signal huge rollover.
• China expected to keep up the fiscal stimulus throughout 2017.
• Taiwan’s iPhone suppliers stocks jump in anticipation of big iPhone 7 sales.
• China selling treasuries to buoy the yuan.
• China pumping money into public-private partnerships.
• Rio Tinto positive on commodities outlook in China.
• Bank of Japan shifts focus to yield curve, consensus says it’s reached its limits in terms of other stimulus measures. I’m thinking it’s simply waiting on the Fed for now.
• Consumer credit up notably, but relatively slow last month in, specifically, revolving credit (good for consumer balance sheets, bad for retail).
• AAII sentiment goes further bearish. Which is bullish!
• Mutual fund managers remain historically cautious. Which is bullish!
• S&P technicals, beyond the very short-term, look pretty decent right here.
• The Fed’s Sept meeting did not deliver the expected hawkish tone. All three of the dissenters will be off the voting team at year-end. Lower for longer looks assured. Doesn’t mean that a quarter-point isn’t on the docket for December.
• Economic data, much of it, trending below expectations.
• Homebuilder optimism blew away expectations, at 65, the highest level since July 2013.
• Housing starts below expectations, mostly single-family and consistent with earlier permit data (but single-family permits decent in last report). Overall permits missed, but due to multi-family.
• Weaker housing starts is all about lack of supply.
• Jobless claims continue their record low streak. Bodes very well for stocks given the strong correlation since 2009. This was also the sample week for the Sept jobs#.
• The LEI’s (leading indicators) unexpected decline, and its relationship to CEI (coincident indicators), does not indicate greater recession risk at this juncture.
• The overall Asian economy appears to be rebounding.
• Crude inventories lowest since February, but still huge, historically speaking.
• Gasoline demand unusually robust for this time of year.
• Analysts and the companies themselves seem to feel better about the upcoming earnings season.
• U.S. equity valuations high, but would need a catalyst to have them turn into a rout. Plus, on a forward basis they’re not at nearly scary levels.
• Low interest rates and the relative safety of U.S. stocks explains their presently high valuations.
• Poor relative strength of consumer sectors doesn’t bode well for the economy. Amazon largely explains the hit to brick and mortar, fear of higher interest rates have been a headwind for expensive staples of late.
• Emerging Markets continue to look up.
• While overall market action appears to favor a Clinton win, that’s clearly not the case with biotech.
• Betting odds heavily favor Clinton in November, ahead of the first debate.
• Prior years that charted like 2016 had very strong gains from this point on.
• The advance-decline line shows strong underlying breadth.
• Tech led the way in terms of better Q2 earnings.
• Q3 earnings are setting up to possibly show the first positive results since Q2 2015.
• Global steel consumption positive year-on-year.
• The Architecture Billing Index declined in August slightly into contraction mode (49.7). However, the new projects inquiry component spiked up to 61.8.
• Infrastructure stocks poised to do well regardless of who wins the election.
• Multinational stocks benefiting big time from weaker dollar in 2016.
• Housing dynamics are positive.
• Corporate earnings outlook improve even during what is traditionally a seasonally weak period.
• German business confidence best reading in 2 years.
• China consumer sentiment, and other data, picking up.
• German consumer confidence misses slightly, Italian confidence beats slightly, and Swiss confidence rebounds notably.
• Chinese currency bears have got to be very frustrated!
• Pimco expects to have office in China by 2018.
• BofA and Blackrock see China debt burden differently. BofA sees crisis likely, Blackrock says government has plenty of ammo to contain it. I say a boxer seldom gets knocked out by the punch he sees coming.
• History says buy volatility in October.
• Pimco sees global recession risk contained through 2017.
• Pimco bullish on emerging markets. So am I!
• Fiscal stimulus may be coming in most developing markets. I see it very likely, via infrastructure, in the U.S. post election.
• South Korea PMI not good (14 mo. low), while China’s shows better output, new orders and outstanding business (although employment fell sharply).
• Deutsche Bank’s woes do not legitimately warn of 2008 systemic problems, not even remotely.
• Britain data mostly good. Denoting less post-Brexit recession risk.
• Sentiment remains decidedly negative (that’s bullish).
• Call volume is picking up like it was leading into 2013 run up in stocks.
• Equity valuations are high, but attractive relative to alternatives. That’s setup for interest rate risk. Bad news for utilities and bonds.
• Current projected earnings growth rate translates to 16.2 p-e in a year.
• NAHB optimism points to higher housing starts going forward.
• Emerging Markets relative performance technicals suggest continued outperformance.
• Market breadth looks good for cyclicals in q4.
• Technical setup looks good for cyclicals, tough for defensives going into q4.