Factbox-European Companies Cut Jobs In Response To Slowing Economy

Market Overview

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

WTI Oil Price Forecast

WTI Price Chart

Brent Oil Price Forecast

Brent Price Chart

Source: fxempire

The S&P 500 is back to its glorious self this year, overcoming some challenges a few months ago to rise 14% year to date. It's resilient, like the U.S. economy, driven by the largest of its 500 components.

There are a number of ways to invest in the S&P 500, and one of the most popular methods today is investing in an exchange-traded fund (ETF) that tracks it. The largest one is the Vanguard S&P 500 ETF (VOO 0.01%), which has $1.4 trillion in assets, but there are several others.

You might think it's a great time to buy in as the market rises, but it's not that simple.

The best time

The S&P 500 has been a wealth-building machine for decades. It gains on average more than 10% annually; Compounded over time, especially with consistent additions, that turns into a lot of money for investors.

As the market rises, investors can benefit from increasing stock prices. And when you invest in an ETF that tracks the S&P 500, it takes all of the guesswork out of investing.

It also gives you exposure to the best companies on the market today, and since it's a weighted index, it's heavily skewed toward artificial intelligence (AI). The largest companies in the U.S. by market cap are the largest companies in the index, and today, these are all AI companies. The Vanguard ETF's top holdings are Nvidia, Microsoft, Apple, and Amazon, and they collectively account for 25% of the total portfolio.

These stocks have incredible long-term tailwinds. Investing in an S&P 500 ETF gives you access to these opportunities while minimizing the risk of investing in only one company.

The worst time

That being said, the best time to buy is on the dip, not at the top. The S&P 500 is breaking records all the time these days, and it's near its most expensive valuation. The average S&P price-to-earnings (P/E) ratio is almost 38, a five-year high. The cyclically adjusted P/E ratio, or CAPE ratio, which adjusts for inflation, is also near highs -- outside of a spike in 2021 right before the market crashed.

S&P 500 Shiller CAPE Ratio data by YCharts.

What does that mean for investors? Nothing concrete, but the nature of the market is that there are always going to be dips, corrections, and even crashes on the way to the top. The market has always recovered and gone on to bigger and better, but as the S&P 500 becomes more and more expensive, the potential for some kind of correction looks likely.

The verdict

No one knows when there might be a dip, or worse. You can't time the market, and even though it's heading higher today, it could keep that up for a long time. It would be a shame to miss out on the growth because of fear of a correction. Keep in mind the potential for some near-term rebalancing as the market becomes even more expensive.

I would caution anyone who might need their funds in the near future to invest in safe, perhaps dividend-yielding stocks and keep some distance from anything that looks overpriced, including an S&P 500 ETF. But if you're in it for the long term, and you have the ability to weather downturns, it's always a good time to invest in the market, and an S&P 500 ETF is an excellent way to do that.

Source: The Motley Fool

OPENING CALL

MARKET WRAPS

Source: morningstar

French Prime Minister Sébastien Lecornu abruptly resigned on Monday morning, just three weeks after his appointment, preempting what appeared to be an inevitable ousting. Lecornu was expected to unveil his policy agenda before the National Assembly on Tuesday, but both the Socialist Party and the National Rally had warned that without a drastic policy shift, they would trigger a no-confidence vote. French bonds and stocks slumped on the emerging political crisis.

President Emmanuel Macron's office issued a one-sentence statement, confirming that Macron had accepted the resignation of Lecornu. This comes amid turmoil over the composition of his cabinet, a coalition of centrists and conservatives.

Lecornu told reporters his resignation was primarily due to the inability to compromise across the political spectrum: "I was ready to compromise, but each political party wanted the other political party to adopt its entire program."

He told reporters in the courtyard of the Matignon Palace, the prime minister's headquarters, that he had spent weeks trying to forge a viable path forward with politicians, unions, and social partners from both political sides, but had achieved no breakthroughs.

Jean Garrigues, one of France's top political historians, told local media that Macron will likely be forced to dissolve the National Assembly once again.

"A fresh dissolution might lead to an increase of seats for the National Rally in the lower house, but it's unlikely that they'll get an outright majority," Garrigues stated in the interview.

UBS analyst Simon Penn provided clients with the three possible pathways for Macron to move forward:

1. He can try another technocrat type

2. He can call a general election

3. He can quit and call a full presidential election

The Bloomberg Economics team provided readers with the visualization.

Penn warned that France is entering a dangerous political environment:

French PM Lecornu has resigned less than a month after he was appointed (Sept. 9). On face value Lecornu looks to have quit before he was forced out. He was due to present his policy proposals to the National Assembly on Tuesday, but leaders of the Socialist and National Rally had already warned that unless there was a total change in direction they would call a vote of no confidence immediately after Lecornu stopped speaking.

Furthermore, the press and public reaction to the appointment of a near unchanged cabinet from the Bayrou administration has been somewhat scornful. President Macron has attempted three times to try for the same policies and failed three times. As the famous quote from Jean-Claude Juncker goes: "We all know what to do, but we don't know how to get re-elected once we have done it."

The latest failure puts French politics into very dangerous territory – more so than the markets seem to be pricing. The lessons of the UK in the 1970s are worth bearing in mind – a government in the early 70s attempting what today would be described as austerity; failing and being replaced by socialist policy, that today might be described as populist. It took mass strikes, power blackouts and an IMF bailout before UK voters were willing to accept the necessary medicine that came in the form of the 1979 Thatcher government.

Meanwhile, across other Wall Street desks this morning, analysts are desperately trying to make sense of the political turmoil and what comes next. Barclays analysts expect parliamentary elections, adding that a Macron resignation is "unlikely."

Political turmoil sent the CAC 40, the benchmark French stock market index, down 1.5% by early afternoon trading in Paris. French bonds also dropped.

More market commentary from UBS analyst Justinus Steinhors: "The Euro Stoxx 50 falls 80bp, retreating from highs. Yields jump on political turmoil: in France, PM Lecornu resigns after less than four weeks in office."

Alexandre Baradez, chief market analyst at IG in Paris, warned, "What's new this morning is the beginning of contagion from France to the rest of the European banking sector. The drop of the sector is 100% linked to France. Given that banks have outperformed the markets so much, all the elements are aligned for some profit-taking on these stocks."

Allianz CIO and Chief Economist Ludovic Subran told Bloomberg that it's not the time to panic.

Lecornu's resignation makes him the shortest-serving prime minister in the history of France's Fifth Republic, founded by Charles de Gaulle in 1958.

Source: Zero Hedge

TOPSHOT - A general aerial view shows houses and Yurts in Ulaanbaatar, Mongolia on June 25, 2024.

Mongolia, long reliant on mining, plans to build data centers powered by renewable energy as it prepares its first sovereign wealth fund aimed at channeling its mineral wealth to social welfare and infrastructure."We have a massive land with a very favorable climate for activities like [hosting] data centers," Temuulen Bayaraa, CEO of the sovereign fund, told CNBC on the sidelines of the Milken Institute Asia Summit in Singapore on Friday.

The landlocked East Asian nation is developing special economic zones dedicated for data centers, she added, referring to the Hunnu City that is envisioned as a smart, sustainable urban city.The Chinggis Khaan Sovereign Wealth Fund, established by law in April last year, has $1.4 billion in reserves and seeks to tap global demand for computing power and clean energy. Its investment strategy is still pending the government's review and final approval.

A host of Asian countries have accelerated efforts to develop data centers this year amid growing demand for cloud computing and artificial intelligence. Japan, Singapore and Malaysia have ramped up investments in building out their data center capacity.The recent explosion in AI workloads globally requires vast computing power, electrical power, cooling and networking infrastructure. Goldman Sachs expects global power demand from data centers to rise 50% by 2027 and by as much as 165% by 2030.

Aside from data centers, part of the fund's returns will also be used to build "mega-scaled" renewable energy power grids and projects, as part of the country's efforts to boost green energy exports to neighboring countries, Bayaraa said. Mongolia, sandwiched between Russia and China, has upgraded its ties with both superpowers to the level of "comprehensive strategic partnerships" in recent years.The plan comes as the Mongolian government pledged to boost the share of renewable energy, especially wind and solar power, in the country's electricity capacity to 30% by 2030, up from 18.3% in 2023.

The fund's investment strategies will also center on countering risks associated with price fluctuations in commodities, Bayaraa said, as the funds' sources are "very dependent on commodities." The Chinggis Fund is managed by Erdenes Mongol, a government-owned holding company that owns a share in the country's mining assets.The sparsely-populated country, with just about 3.5 million residents, has benefited from a boom in prices for its rich supplies of critical minerals, including coal, copper, uranium and rare-earth elements.

Rebuilding trust

The Mongolian government has been under growing pressure to distribute its mineral wealth among its people and put an end to corruption in the sector. Anti-corruption protests in its capital, Ulaanbaatar, earlier this year forced Oyun-Erdene Luvsannamsrai to step down as prime minister."People didn't feel like mining contributed to the wealth, betterment of their livelihoods while eroding the natural resources. But now the sovereign wealth fund is positioned in a way to rebuild that trust," Bayaraa said.

The fund will play a central role in the country's development plan aimed at providing more transparency and equity in wealth distribution, she added, by pulling in mineral wealth to be "managed and disbursed in a ring-fenced manner to support people, their educational needs, financing, educational, healthcare and housing needs.""The critical work is to build a governance model [for the fund]," she added. Citizens will be able to access on an app details of the fund's sources, allocation and balance. "It's very targeted intervention for expanding middle class, pushing labor market participation," she said.

The fund's leader plans to hire members of the Mongolian diaspora with experience in the banking, investment, and wealth management industries to return home and help manage the fund."For the longest time, Mongolia has been attracting investment into Mongolia. For the first day, we are becoming an investor to contribute to the global agenda," Bayaraa said.

Source: CNBC

Before the tap of US economic indicators was turned off by the shutdown of the federal government that’s still in force, readings on American consumer spending continued to be resilient in the face of President Donald Trump’s steep tariff increases.

That this would have been the case in late summer 2025 was unexpected by many at the start of the year. Economists broadly had anticipated that jacking up levies on imports would stoke inflation, damage households’ purchasing power, and undermine spending.

“We in the economics profession need to look ourselves in the mirror,” Torsten Slok, chief economist at Apollo Global Management, wrote in a note to clients last week. “The consensus has been wrong since January. The forecast for the past nine months has been that the US economy would slow down. But the reality is that it has simply not happened.”

On of the last government-issued data prints before the Oct. 1 shutdown showed that consumer spending, after taking out inflation, climbed 0.4% in August — double the median forecast, even after the July base of comparison was revised higher. And that’s also despite a major slowdown in job growth.

So what gives? Some economists are concluding it’s the wealth effect. The S&P 500 Index has handed investors a 15%-plus total return so far this year, bonds are up and home values are higher compared with 2024. All in, Goldman Sachs economist Manuel Abecasis tallies that household net worth has increased to more than 800% of disposable (i.e. after-tax) income, near a record high.

As wealth has gone up, Americans’ savings rates have come down. At last look, in August, it was 4.6%, compared with an average of 5.4% last year and 5.6% the year before. “This suggests that wealth effects are driving spending,” Douglas Holtz-Eakin, president of the American Action Forum, an economic policy research group, wrote in a note last week.

The flip side of that, Holtz-Eakin cautions: “One of the real risks to the outlook is the pricing in equity markets.”

Anatole Kaletsky, chief economist and co-founder of Gavekal, goes further. If an economic downturn is avoided, this will “further entrench inflation,” making it more difficult for the Fed to lower rates — in turn putting pressure on the bond market. “The period of greatest danger for US financial markets lies ahead,” he wrote in a note last week.

Three possible rate cuts in Asia, Fed and ECB minutes, testimony by Lagarde in the European Union’s parliament and a speech by the Bank of England Governor Andrew Bailey may draw attention.

Source: Bloomberg Europe